Imperfect Information
In this paper Coibion, Gorodnichenko, and Kamdar use the New Keynesian Phillips curve to show that by using micro-level survey-based data on subjective inflation expectations they can address a number of otherwise puzzling shortcomings that arise under the assumption of full-information rational expectations.
The Formation of Expectations, Inflation and the Phillips Curve
Authors: Olivier Coibion, Yuriy Gorodnichenko, Rupal Kamdar
From: UT Austin – UC Berkeley
Distorted perceptions
Khaw, Li and Woodford show how imprecise mental representations of the monetary amounts that are offered in a gamble could explain the observed randomness in choices people make when they evaluate risky income prospects.
Risk Aversion as a Conceptual Bias
Authors: Mel Win Khaw, Ziang Li, Michael Woodford
From: Columbia University
Myopia
Gabaix and Laibson show that imperfect foresight makes agents appear to behave more impatiently than implied by their deep time preferences. In addition, they argue that this myopia is domain specific ie decreases with overall time experience, cognitive abilities and specific expertise.
Myopia and Discounting
Authors: Xavier Gabaix, David Laibson
From: Harvard University
