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Informational Herding with Model Misspecification, Second Version

Bohren, J. Aislinn - 2015

This paper demonstrates that a misspecified model of information processing interferes with long-run learning and allows inefficient choices to persist in the face of contradictory public information. I consider an observational learning environment where agents observe a private signal about a...

Persistent link: https://www.econbiz.de/10014134991

Informational Herding with Model Misspecification

Bohren, J. Aislinn - 2014

This paper demonstrates that a misspecified model of information processing interferes with long-run learning and offers an explanation for why individuals may continue to choose an inefficient action, despite sufficient public information to learn the true state. I consider a social learning...

Persistent link: https://www.econbiz.de/10014148066

Effective Persuasion

Chen, Ying; Olszewski, Wojciech - 2011

Do elementary statistics or equilibrium theory deliver any rules of thumb regarding how we should argue in debates? We …

Persistent link: https://www.econbiz.de/10014043082

Optimal robust monetary policy in a small open economy

André, Marine Charlotte; Medina Espidio, Sebastián - 2022

We study an optimal robust monetary policy for a small open economy. The robust control approach assumes that economic agents cannot assign probabilities to a set of plausible models and rather focuses on the worst possible misspecification from a benchmark model. Our findings suggest that,...

Persistent link: https://www.econbiz.de/10013464822

Dealers as Information Intermediaries in Over-the-Counter Market

Li, Wei - 2019

We model the role of dealers in information diffusion in over-the-counter (OTC) markets. A dealer maintains relationships with a network of both informed customers who trade to profit from private information pertaining to asset values and risk-averse liquidity customers who trade to meet...

Persistent link: https://www.econbiz.de/10012890811

Machine Forecast Disagreement

Bali, Turan G.; Kelly, Bryan T.; Mörke, Mathis; … - National Bureau of Economic Research - 2023

We propose a statistical model of differences in beliefs in which heterogeneous investors are represented as different machine learning model specifications. Each investor forms return forecasts from their own specific model using data inputs that are available to all investors. We measure...

Persistent link: https://www.econbiz.de/10014337816

Toward a cognitive science of markets : economic agents as sense-makers

Johnson, Samuel G. B. - 2019

Behavioral economics aspires to replace the agents of neoclassical economics with living, breathing human beings. Here, the author argues that behavioral economics, like its neoclassical counterpart, often neglects the role of active sense-making that motivates and guides much human behavior....

Persistent link: https://www.econbiz.de/10012130847

Toward a cognitive science of markets : economic agents as sense-makers

Johnson, Samuel G. B. - 2019

Behavioral economics characterizes decision-makers using psychologically-informed models. Cognitive science produces psychologically-informed models. Why don't these disciplines talk more? Here, the author presents several arguments for why cognitive science should inform behavioral economics -...

Persistent link: https://www.econbiz.de/10011976074

Measuring price risk aversion through indirect utility functions : a laboratory experiment

Zeytoon-Nejad, Ali - In: Games 13 (2022) 4, pp. 1-43

prices can be measured through the context of the indirect utility function (IUF) using a lab experiment. First, the paper … introduces the main elements of the duality theory (DT) in economics. Next, it proposes the context of IUFs as a suitable … experiment using a series of relevant statistical tests. This study uses the multiple price list (MPL) method, which has been one …

Persistent link: https://www.econbiz.de/10013368182

The Effect of Transaction Cost Unbundling on Investors' Reliance on Investment Research : Evidence from Experimental Asset Markets

Stirnkorb, Sebastian - 2021

variable fees, such as those for trade executions. Drawing on transaction decoupling theory, I examine how transaction cost …

Persistent link: https://www.econbiz.de/10013321547