Markets and expectations -- Expected utility maximization -- Effects of heterogeneous expectations -- Forecasting among alternative strategies under uncertainty -- Expectations in time series models -- Costly information and decision making -- Applied welfare economics with boundedly rational...

Summary The experimental evidence gathered in this study indicates that a preference for domestic investments exists even under fixed exchange rates and in the absence of factors commonly understood to give rise to asymmetric portfolios. Adding exchange rate risk does not - contrary to theory -...

We study the historical trends in the coverage of the related topics growth and stability in the field of macroeconomics. It is argued that over the past 25 years research on growth has quantitatively dominated research on output variability. The article seeks to make a contribution to an...

We investigate how banks’ boundedly rational learning influences their views about default risks over the business cycle. Our analysis details the direction and the magnitude of these effects assuming that banks update probability in a Bayesian way. With a limited experience span lenders are...

This book offers a broad perspective on the economics of expectations. Experimental studies are used to analyse how human bounded rationality affects economic performance. The challenges posed for policy making are also addressed.