Balancing the current account: experimental evidence on underconsumption

Giamattei, Marcus; Lambsdorff, Johann Graf

doi:10.1007/s10683-014-9422-z

Cited by 3 publications

(2 citation statements)

References 26 publications

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“…This can be formalized in a level‐

k

model that provides a parsimonious specification for the inertia of price setters. It fits well to an experiment with full information and a high coordination motive (Shapiro, Shi, and Zillante 2014, Bosworth 2017) and can explain disequilibrium behavior quite well (Giamattei and Lambsdorff 2015). In addition, it is tractable and often applied in macroeconomic models (Angeletos and Lian 2018, Iovino and Sergeyev 2018, Garcia‐Schmidt and Woodford 2019).…”

Section: Hypothesessupporting

confidence: 76%

Can Cold Turkey Reduce Inflation Inertia? Evidence on Disinflation and Level‐k Thinking from a Laboratory Experiment

Giamattei¹

2021

J of Money Credit Banking

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It is widely believed that inflation inertia varies with the policy pursued. In a novel experiment, price setters determine inflation rates and react to a central bank's indicator, which is implemented exogenously either as cold turkey or gradual disinflation. In a third treatment, subjects in the role of a central banker set the indicator endogenously, potentially reducing inertia by signaling to be a tough central banker. I find inertia to be structurally stable and invariant to policies. The data can be organized by a model of level‐k$k$ thinking, which shows that cold turkey improves only a few subjects' adjustment while leaving many behind.

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“…This can be formalized in a level‐

k

Section: Hypothesessupporting

confidence: 76%

Can Cold Turkey Reduce Inflation Inertia? Evidence on Disinflation and Level‐k Thinking from a Laboratory Experiment

Giamattei¹

2021

J of Money Credit Banking

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“…Subjects choose the business indicator as a simple heuristic instead of the equilibrium (20+ /2). In another macroeconomic application, Giamattei and Lambsdorff (2015) use the beauty contest with a known constant as a model of the Keynesian multiplier where is a non-stationary series of exogenous investments. Subjects have to choose individually optimal consumption as 4/5*income, where 4/5 is the marginal propensity to consume.…”

Section: Related Macroeconomic Experimentsmentioning

confidence: 99%

Inspired and inspiring: Hervé Moulin and the discovery of the beauty contest game

Nagel

Bühren

Frank

2017

Mathematical Social Sciences

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We draw an unusually detailed picture of a discovery, the beauty contest game -with Hervé Moulin as the center of the initial inspiration. Since its inception, the beauty contest game and the descriptive level k model has widely contributed to the growth of experimental and behavioral economics and expanded also to other areas within and outside of economics. We illustrate, in particular, the recent interaction between macroeconomic theorists and experimenters, who independently had worked on the puzzles and consequences due to beauty contest features. Furthermore, we introduce a new variety of the twoperson beauty contest game with two different payoff structures that leads to different game-theoretic properties unperceived by naïve subjects and game theory experts alike.

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Levels of Reasoning in Keynesian Beauty Contests: A Generative Framework

Mauersberger

Nagel

2018

Handbook of Computational Economics

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Balancing the current account: experimental evidence on underconsumption

Cited by 3 publications

References 26 publications

Can Cold Turkey Reduce Inflation Inertia? Evidence on Disinflation and Level‐k Thinking from a Laboratory Experiment

Can Cold Turkey Reduce Inflation Inertia? Evidence on Disinflation and Level‐k Thinking from a Laboratory Experiment

Inspired and inspiring: Hervé Moulin and the discovery of the beauty contest game

Levels of Reasoning in Keynesian Beauty Contests: A Generative Framework

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