Expectations and Learning from Prices.
We study mislearning from equilibrium prices, and contrast this with mislearning from exogenous fundamentals. We micro-found mislearning from prices with a psychologically founded theory of "Partial Equilibrium Thinking" (PET), where traders learn fundamental information from prices, but fail to rea...
| Publicado en: | Review of Economic Studies Vol. 92; no. 3; pp. 1341 - 1375 |
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| Autores principales: | , |
| Formato: | Artículo |
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Oxford University Press / USA
May2025
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| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=186419601&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 186419601 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 00346527 REM jtl: Review of Economic Studies issn: 00346527 maglogo: N pubinfo: dt: May2025 vid: 92 iid: 3 pid: 622 pub: Oxford University Press / USA artinfo: ui: 186419601 10.1093/restud/rdae059 ppf: 1341 ppct: 34 formats: tig: atl: Expectations and Learning from Prices. aug: au: Bastianello, Francesca Fontanier, Paul affil: Booth School of Business, University of Chicago, USA School of Management, Yale University, USA su: Prices Demand function Equilibrium sug: subj: Prices Demand function Equilibrium keyword: Behavioural Expectations Inelastic markets Learning Subjective models Behavioural Expectations Inelastic markets Learning Subjective models ab: We study mislearning from equilibrium prices, and contrast this with mislearning from exogenous fundamentals. We micro-found mislearning from prices with a psychologically founded theory of "Partial Equilibrium Thinking" (PET), where traders learn fundamental information from prices, but fail to realize others do so too. PET leads to over-reaction, and upward sloping demand curves, thus contributing to more inelastic markets. The degree of individual-level over-reaction and the extent of inelasticity vary with the composition of traders, and with the informativeness of new information. More generally, unlike mislearning from fundamentals, mislearning from prices (i) generates a two-way feedback between prices and beliefs that can provide an arbitrarily large amount of amplification and (ii) can rationalize both over-reaction and more inelastic markets. The two classes of biases are not mutually exclusive. Instead, they interact in very natural ways, and mislearning from prices can vastly amplify mislearning from fundamentals. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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