Incorporating adaptive learning into macroeconomics requires assumptions about how agents incorporate their forecasts into their decision-making. We develop a theory of bounded rationality that we call finite-horizon learning. This approach generalizes the two existing benchmarks in the...

This document contains supplementary materials to accompany all papers using the “private choices†survey associated with our larger project on the valuation of morbidity and mortality risk reductions for policy analysis. This is a “living document†in that we plan to...

Past literature has found evidence that labor market attributes affect individuals’ trade policy preferences in a manner consistent with theories of international trade. This paper shows that, with the exception of education, these relationships between labor market attributes and trade...

We reexamine issues of coordination in the standard RBC model. Is the unique rational expectations equilibrium attainable by rational agents who contemplate the possibility of small deviations from equilibrium? Surprisingly, we find that coordination cannot be expected. Even with strong common...

In Evans, Guse, and Honkapohja (2008) the intended steady state is locally but not globally stable under adaptive learning, and unstable deflationary paths can arise after large pessimistic shocks to expectations. In the current paper a modified model is presented that includes a locally stable...

Experimental work on preferences over risk has typically considered choices over a small number of discrete options, some of which involve no risk. Such experiments often demonstrate contradictions of standard expected utility theory. We reconsider this literature with a new preference...

Economic experiments have shown that in mixed gender groups women are more reluctant than men to choose tournaments when given the choice between piece rate and winner-take-all tournament style compensation. These gender difference experiments have all relied on a framework where subjects were...

We examine global economic dynamics under infinite-horizon learning in a New Keynesian model in which the interest-rate rule is subject to the zero lower bound. As in Evans, Guse and Honkapohja (2008), we find that under normal monetary and fiscal policy the intended steady state is locally but...

As the U.S. contemplates health care reform that may involve more publicly provided health services, it is important to understand the likely patterns in public support for, and opposition to, public provision of treatments that increase recoveries and reduce deaths. We find that support (and...

This paper studies the implications for monetary policy of heterogeneous expectations in a New Keynesian model. The assumption of rational expec- tations is replaced with parsimonious forecasting models where agents select between predictors that are underparameterized. In a Misspecification...