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Asset Pricing under Rational Learning about Rare Disasters

Koulovatianos, Christos; Wieland, Volker - C.E.P.R. Discussion Papers - 2011

This paper proposes a new approach for modeling investor fear after rare disasters. The key element is to take into account that investors' information about fundamentals driving rare downward jumps in the dividend process is not perfect. Bayesian learning implies that beliefs about the...

Persistent link: https://www.econbiz.de/10009201120

Durable consumption and asset management with transaction and observation costs

Alvarez, Fernando; Guiso, Luigi; Lippi, Francesco - C.E.P.R. Discussion Papers - 2010

The empirical evidence on rational inattention lags far behind the theoretical developments: micro evidence on the most immediate consequence of observation costs - the infrequent observation of state variables - is not available in standard datasets. We contribute to filling the gap with two...

Persistent link: https://www.econbiz.de/10008468638

Loss Aversion and Consumption Choice: Theory and Experimental Evidence

Karle, Heiko; Kirchsteiger, Georg; Peitz, Martin - C.E.P.R. Discussion Papers - 2012

In this paper we analyze a consumer choice model with price uncertainty, loss aversion, and expectation-based reference points. The implications of this model are tested in an experiment in which participants have to make a consumption choice between two sandwiches. We make use of the fact that...

Persistent link: https://www.econbiz.de/10011084678

Treasure Hunt: Social Learning in the Field

Mobius, Markus; Phan, Tuan; Szeidl, Adam - C.E.P.R. Discussion Papers - 2015

We seed noisy information to members of a real-world social network to study how information diffusion and information aggregation jointly shape social learning. Our environment features substantial social learning. We show that learning occurs via diffusion which is highly imperfect: signals...

Persistent link: https://www.econbiz.de/10011201359

Information Gatekeepers: Theory and Experimental Evidence

Brocas, Isabelle; Carrillo, Juan D; Palfrey, Thomas R - C.E.P.R. Discussion Papers - 2009

of the world in order to influence the choice of a decision maker. We characterize the sampling strategies of the …%). They occur in both directions, with more over-sampling (39%) than under-sampling (8%). The main difference with the theory … theory, with adversaries sampling more when their own cost is low and when the other adversary's cost is high. Finally, there …

Persistent link: https://www.econbiz.de/10008528540

Guru Dreams and Competition: An Anatomy of the Economics of Blogs

Dong, Yi; Massa, Massimo; Zhang, Hong - C.E.P.R. Discussion Papers - 2015

The rise of social media has encouraged guru dreams because of the low entry barrier and highly skewed distribution of public attention that characterize social media. The pursuit of guru status, however, may be achieved through information provision or cheap talk, and competition inherent to...

Persistent link: https://www.econbiz.de/10011196033

Investment, Resolution of Risk, and the Role of Affect

Hopfensitz, Astrid; Krawczyk, Michal; Winden, Frans … - C.E.P.R. Discussion Papers - 2008

This experimental study is concerned with the impact of the timing of the resolution of risk on people’s willingness to take risks, with a special focus on the role of affect. While the importance of anticipatory emotions has so far been only inferred from decisions regarding hypothetical...

Persistent link: https://www.econbiz.de/10005124205

Consumption Over the Life-Cycle

Gourinchas, Pierre-Olivier; Parker, Jonathan A - C.E.P.R. Discussion Papers - 2000

This paper employs cohort technique and Consumer Expenditure Survey data to construct average age-profiles of consumption and income over the working lives of typical households across different education and occupation groups. Using these profiles, we estimate a structural model of optimal...

Persistent link: https://www.econbiz.de/10005504201

Effects on School Enrollment and Performance of a Conditional Cash Transfers Program in Mexico

de Janvry, Alain; Dubois, Pierre; Sadoulet, Elisabeth - C.E.P.R. Discussion Papers - 2007

We study the effects of a conditional cash transfers program on school enrollment and performance in Mexico. We provide a theoretical framework for analyzing the dynamic educational process including the endogeneity and uncertainty of performance at school (passing grades) and the effect of a...

Persistent link: https://www.econbiz.de/10005504259

Formal and Informal Risk Sharing in LDCs: Theory and Empirical Evidence

Dubois, Pierre; Jullien, Bruno; Magnac, Thierry - C.E.P.R. Discussion Papers - 2007

We develop and estimate a model of dynamic interactions where commitment is limited and contracts are incomplete to explain the patterns of income and consumption growth in village economies of less developed countries. Households can insure through both formal contracts and informal agreements,...

Persistent link: https://www.econbiz.de/10005504414