Bounded rationality in Keynesian beauty contests: a lesson for central bankers?

Mauersberger, Felix; Nagel, Rosemarie; Bühren, Christoph

doi:10.5018/economics-ejournal.ja.2020-16

Cited by 6 publications

(2 citation statements)

References 84 publications

(111 reference statements)

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“…For an overview, see Crawford, Costa-Gomes, and Iriberri (2013). Mauersberger, Nagel, and Buehren (2020) discuss how such models have recently become the framework for behavioral macroeconomics.…”

Section: Hypothesesmentioning

confidence: 99%

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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Section: Hypothesesmentioning

confidence: 99%

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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“…The financial crisis of 2008 brought into question the characteristics of previously observed standard economic theories (Boyer, 2018). Thus, the Great Recession caused an apparent contradiction between empirical findings and macroeconomic models based on rational expectations (Mauersberger et al, 2020). Traditional economic theory failed to explain, let alone predict, the imminent collapse of the financial system and its long-term effects on the global economy of European countries (Soltes & Gavurova, 2014, 2015Battiston et al, 2016).…”

Section: Introductionmentioning

confidence: 99%

Changes in real income of households in the Czech Republic due to the Russian invasion of Ukraine

Vochozka,

Škapa,

Apanovych

2023

JESI

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The objective of the paper was to assess the impact of the invasion of Ukraine by the Russian Federation on real household income in the Czech Republic. The research methods used in the study include content analysis, seasonal modification of SARIMA, and discounting method, specifically NPV. Data were collected from publicly available sources of the Czech Statistical Office. Based on a content analysis of the macroeconomic indicators under study, inflation and gross monthly household income were selected to examine further development of real household income in the Czech Republic. Based on historical data, the SARIMA model made statistically relevant forecasts of the selected variables for the "pre-war" year 2022. Comparing real and forecast data, it was confirmed that the Russian invasion of Ukraine (from 24 th February 2022 onwards) has shown how vulnerable the European financial system is to external shocks, which can be observed in significant inflationary changes. The ability of the SARIMA model to handle a larger range of data and accurately determined seasonality was demonstrated in forecasting the development of real household income. The identified economic consequences of deviations of the real and forecast figures in the "pre-war" period showed new realities in turbulent economic conditions. In order to further expand the research, combining the applied method with other analytical tools can be recommended. Moreover, it is advisable to include new relevant variables in the model. This would allow understanding better and forecasting the development of real household income in the context of current economic events.

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Mutual Expected Rationality in Online Sharing: An Agent-Based Model Study

Rich,

Genot

2024

Topoi

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Models of content-sharing behavior on online social media platforms typically represent content spread as a diffusion process modeled on contagious diseases; users’ behavior is modeled with single-agent decision theory. However, social media platforms are interactive spaces where users care about reactions to, and further spread of, the content they post. Thus, social media interaction falls under the intended use cases for game theory. In contrast to existing models leaving strategic reasoning out, we capture agents’ social media decisions within a cognitive hierarchy framework, which can be interpreted as making formally precise how agents make strategic choices based on mutual expectations of rationality. Analytically, we identify limit cases in which a platform can be swamped with content that no agents personally like but all expect to elicit reactions (think obvious fake-news). We then use agent-based simulations to show that a range of more realistic cases give rise to similar outcomes.

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Bounded rationality in Keynesian beauty contests: a lesson for central bankers?

Cited by 6 publications

References 84 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

Changes in real income of households in the Czech Republic due to the Russian invasion of Ukraine

Mutual Expected Rationality in Online Sharing: An Agent-Based Model Study

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