We introduce the notion of a Conditional Hypothesis Testing System (CHTS) that specifies the concrete mode of non-Bayesian reactions for unexpected news in a conditional world. We show that Ortoleva's (2012) Hypothesis Testing Model (HTM) gives rise to a CHTS and thus provides an axiomatic...

Base rate neglect typically involves the underweighting of priors in a world with objective probability distributions (Kahneman and Tversky, 1973). In reality, however, individuals often face scenarios with ambiguous priors, in which they have no full confidence. We show, theoretically, that...

Bayesian decisions are observationally identical to decisions with judgment. Decisions with judgment test whether a judgmental decision is optimal and, in case of rejection, move to the closest boundary of the confidence interval, for a given confidence level. The resulting decisions condition...

Pro-environmental waste disposal behavior plays a fundamental role in improving rural waste management and rural livability. Recent years have witnessed an increased social, political and academic interest in the influencing mechanism of pro-environmental waste disposal behavior. In particular,...

This paper investigates the ability of several generalized Bayesian vector autoregressions to cope with the extreme COVID-19 observations and discusses their impact on prior calibration for inference and forecasting purposes. It shows that the preferred model interprets the pandemic episode as a...

In light of widespread evidence of parameter instability in macroeconomic models, many time-varying parameter (TVP) models have been proposed. This paper proposes a nonparametric TVP-VAR model using Bayesian additive regression trees (BART). The novelty of this model stems from the fact that the...

We find that macroeconomic uncertainty plays a significant role in U.S. monetary policy. First, we construct a measure of uncertainty as felt by policymakers at the time of making their rate-setting decisions. This measure is derived from a real-time, Bayesian estimation of a small monetary VAR...