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Bailout Uncertainty in a Microfounded General Equilibrium Model of the Financial System

Cukierman, Alex; Izhakian, Yehuda - C.E.P.R. Discussion Papers - 2011

, ultimate lenders and financial intermediaries. The model is used to investigate the impact of uncertainty about the likelihood … between risk and uncertainty is implemented by applying the Gilboa-Schmeidler maxmin with multiple priors framework to lenders … include: (i) An unanticipated increase in bailout uncertainty raises interest rates, the volume of defaults in both the real …

Persistent link: https://www.econbiz.de/10009144737

To Charge or Not to Charge: Evidence from a Health Products Experiment in Uganda

Fischer, Greg; Karlan, Dean S.; McConnell, Margaret; … - C.E.P.R. Discussion Papers - 2014

Pricing policy for any experience good faces a key tradeoff. On one hand, a price reduction increases immediate demand and hence more people learn about the product. On the other hand, lower prices may serve as price anchors and, through a comparison effect, decrease subsequent demand. This...

Persistent link: https://www.econbiz.de/10011083717

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 …

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

Financial Disclosure and Market Transparency with Costly Information Processing

Di Maggio, Marco; Pagano, Marco - C.E.P.R. Discussion Papers - 2012

We study a model where some investors (“hedgers”) are bad at information processing, while others (“speculators”) have superior information-processing ability and trade purely to exploit it. The disclosure of financial information induces a trade externality: if speculators refrain from...

Persistent link: https://www.econbiz.de/10011083365

Sectoral Price Data and Models of Price Setting

Mackowiak, Bartosz Adam; Moench, Emanuel; Wiederholt, Mirko - C.E.P.R. Discussion Papers - 2009

We estimate impulse responses of sectoral price indexes to aggregate shocks and to sector-specific shocks. In the median sector, 100 percent of the long-run response of the sectoral price index to a sector-specific shock occurs in the month of the shock. The standard Calvo model and the standard...

Persistent link: https://www.econbiz.de/10005034762

Inattention to Rare Events

Mackowiak, Bartosz Adam; Wiederholt, Mirko - C.E.P.R. Discussion Papers - 2011

Why were people so unprepared for the global financial crisis, the European debt crisis, and the Fukushima nuclear accident? To address this question, we study a model in which agents make state-contingent plans - think about actions in different contingencies - subject to the constraint that...

Persistent link: https://www.econbiz.de/10009351517

Business Cycle Dynamics under Rational Inattention

Mackowiak, Bartosz Adam; Wiederholt, Mirko - C.E.P.R. Discussion Papers - 2010

This paper develops a dynamic stochastic general equilibrium model with rational inattention. Households and decision-makers in firms have limited attention and decide how to allocate their attention. The paper studies the implications of rational inattention for business cycle dynamics. Impulse...

Persistent link: https://www.econbiz.de/10008468587

Manipulating Reliance on Intuition Reduces Risk and Ambiguity Aversion.

Butler, Jeff; Guiso, Luigi; Jappelli, Tullio - C.E.P.R. Discussion Papers - 2013

Prior research suggests that those who rely on intuition rather than effortful reasoning when making decisions are less averse to risk and ambiguity. The evidence is largely correlational, however, leaving open the question of the direction of causality. In this paper, we present experimental...

Persistent link: https://www.econbiz.de/10011083555

Perceiving Prospects Properly

Steiner, Jakub; Stewart, Colin - C.E.P.R. Discussion Papers - 2014

When an agent chooses between prospects, noise in information processing generates an effect akin to the winner’s curse. Statistically unbiased perception systematically overvalues the chosen action because it fails to account for the possibility that noise is responsible for making the...

Persistent link: https://www.econbiz.de/10011083577

Banker Compensation and Confirmation Bias

Sabourian, Hamid; Sibert, Anne - C.E.P.R. Discussion Papers - 2009

Confirmation bias refers to cognitive errors that bias one towards one's own prior beliefs. A vast empirical literature documents its existence and psychologists identify it as one of the most problematic aspects of human reasoning. In this paper, we present three related scenarios where...

Persistent link: https://www.econbiz.de/10005661569