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This paper sets out to investigate the role of additive uncertainty under plausible non-standard central bank loss functions over future inflation. Building on a substantial body of evidence in the economic psychology literature, this paper postulates (i) period-by-period loss functions that are...
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Experiments in psychology, where subjects estimate confidence intervals to a series of factual questions, have shown that individuals report far too narrow intervals. This has been interpreted as evidence of overconfidence in the preciseness of knowledge, a potentially serious violation of the...
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risk-related topics of standard finance are classical decision theory, rationality, risk-averse behavior, modern portfolio … theory, and the capital asset pricing model. The behavioral finance viewpoint examines both the quantitative (objective) and … issues of decision-making. The risk-oriented subjects of behavioral finance are behavioral decision theory, bounded …
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