tag:blogger.com,1999:blog-4159906646513306121.post3498339593567391624..comments2023-11-19T20:38:50.237-08:00Comments on Economic Logic: Inflation expectations and rational behaviorEconomic Logicianhttp://www.blogger.com/profile/10171296292101248614noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-4159906646513306121.post-83574327522308461602012-11-30T08:21:43.320-08:002012-11-30T08:21:43.320-08:00That really depends on the research question. My r...That really depends on the research question. My reading of the literature is that the presence of people deviating from standard expected utility maximization does not have much of an impact on the behavior of markets, unless the deviators do really weird stuff. So if you are interested in the impact of policy on markets, we are doing fine with standard theory in this respect.<br /><br />If you are looking for household welfare, this may be a different question. After all, you have people potentially fooling themselves, and you may want to do something about that. Then it becomes important to identify what their beliefs are, how they act on them and then how policy can help them.Economic Logicianhttps://www.blogger.com/profile/10171296292101248614noreply@blogger.comtag:blogger.com,1999:blog-4159906646513306121.post-33528108758542683862012-11-30T08:13:37.540-08:002012-11-30T08:13:37.540-08:00Hi,
There is another literature (from Experimental...Hi,<br />There is another literature (from Experimental Economics) suggesting that more people behave as if Expected Utility (55%) rather than as if Prospect Theory (45%), but not by much. Do you have any comments on Mixture models?<br />Reference: http://cear.gsu.edu/workshops/1/Harrison2.pdfAnonymousnoreply@blogger.com