Limited Rationality and Strategic Interaction: The Impact of the Strategic Environment on Nominal Inertia
| العنوان: | Limited Rationality and Strategic Interaction: The Impact of the Strategic Environment on Nominal Inertia |
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| المؤلفون: | Ernst Fehr, Jean-Robert Tyran |
| المساهمون: | University of Zurich, Fehr, Ernst |
| المصدر: | ResearcherID |
| بيانات النشر: | The Econometric Society, 2008. |
| سنة النشر: | 2008 |
| مصطلحات موضوعية: | jel:C92, Economics and Econometrics, Strategic complements, Nominal rigidity, 2002 Economics and Econometrics, Rationality, Context (language use), jel:E52, jel:E31, Bounded rationality, Bounded rationality, strategic substitutes, strategic complements, nominal rigidity, sticky prices, 330 Economics, Microeconomics, Shock (economics), 10007 Department of Economics, Complementarity (molecular biology), Money illusion, Economics |
| الوصف: | Much evidence suggests that people are heterogeneous with regard to their abilities to make rational, forward-looking decisions. This raises the question as to when the rational types are decisive for aggregate outcomes and when the boundedly rational types shape aggregate results. We examine this question in the context of a long-standing and important economic problem: the adjustment of nominal prices after an anticipated monetary shock. Our experiments suggest that two types of bounded rationality – money illusion and anchoring – are important behavioral forces behind nominal inertia. However, depending on the strategic environment, bounded rationality has vastly different effects on aggregate price adjustment. If agents’ actions are strategic substitutes, adjustment to the new equilibrium is extremely quick, whereas under strategic complementarity, adjustment is both very slow and associated with relatively large real effects. This adjustment difference is driven by price expectations, which are very flexible and forward-looking under substitutability but adaptive and sticky under complementarity. Moreover, subjects’ expectations are also considerably more rational under substitutability. |
| وصف الملف: | 2008_FehrE_Econometrica_Limited_Rationality_and_strategic_interaction_J-R_TyranV.pdf - application/pdf |
| تدمد: | 1468-0262 0012-9682 |
| الوصول الحر: | https://explore.openaire.eu/search/publication?articleId=doi_dedup___::fb24b992bdc7abce7017fe1fc4ead8f7Test https://doi.org/10.1111/j.1468-0262.2008.00836.xTest |
| حقوق: | OPEN |
| رقم الانضمام: | edsair.doi.dedup.....fb24b992bdc7abce7017fe1fc4ead8f7 |
| قاعدة البيانات: | OpenAIRE |
| تدمد: | 14680262 00129682 |
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