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Rational Expectations and the Limits of Rationality: An Analysis of Heterogeneity
John Haltiwanger,Michael Waldman +1 more
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This article is published in The American Economic Review.The article was published on 1985-01-01 and is currently open access. It has received 202 citations till now. The article focuses on the topics: Rational expectations & Rationality.read more
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Noise Trader Risk in Financial Markets
TL;DR: In this article, the authors present a simple overlapping generations model of an asset market in which irrational noise traders with erroneous stochastic beliefs both affect prices and earn higher expected returns.
Book ChapterDOI
Rational choice and the framing of decisions
Amos Tversky,Daniel Kahneman +1 more
TL;DR: In this article, the authors trace the violations of the rational theory of choice to the rules that govern the framing of decision and to the psychological principles of evaluation embodied in prospect theory, and argue that these rules are normatively essential but descriptively invalid.
Posted Content
Psychology and Economics
TL;DR: In this paper, the authors present a longer version of an essay under preparation for possible publication in the Journal of Economic Literature, which they refer to as their work on reference-dependent utility.
Journal ArticleDOI
Heterogeneous beliefs and routes to chaos in a simple asset pricing model
William A. Brock,Cars Hommes +1 more
TL;DR: In this paper, the authors investigate the dynamics in a simple present discounted value asset pricing model with heterogeneous beliefs, where agents choose from a finite set of predictors of future prices of a risky asset and revise their "beliefs" in each period in a boundedly rational way, according to a fitness measure such as past realized profits.
Journal ArticleDOI
Coordinating Coordination Failures in Keynesian Models
Russell Cooper,Andrew John +1 more
TL;DR: In this paper, the importance of strategic complementarities in agents' payoff functions as a basis for macroeconomic coordination failures is discussed, where the optimal strategy of an agent depends positively upon the strategies of the other agents.