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Myopia and Anchoring
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AI
DOI：10.1257/aer.20191436.png)
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Abstract
En 中文
We develop an equivalence between the equilibrium effects of incomplete information and those of two behavioral distortions: myopia, or extra discounting of the future; and anchoring of current behavior to past behavior, as in models with habit persistence or adjustment costs. We show how these distortions depend on higher-order beliefs and GE mechanisms, and how they can be disciplined by evidence on expectations. We finally illustrate the use of our toolbox with a quantitative application in the context of inflation, a bridge to the HANK literature, and an extension to networks.
Keywords:
STICKY-INFORMATION
MONETARY-POLICY
SOCIAL VALUE
EXPECTATIONS
CONSUMPTION
DYNAMICS
PRICES
MODEL
RISE