The standard approach to nominal illusion in Economics sees it as a transitory phenomenon, as economic agents eventually see through the nominal veil, making the right choices. Recent empirical studies suggest that money illusion may persist, distorting real prices in a variety of economic...

Money illusion, first documented by Fisher(1928), is the phenomenon that an agent cannot distinguish real monetary value from nominal one. In this paper, money illusion is considered as a matter of information based on the Grossman and Stiglitz(1980), and the uninformed investors can...

We explore the influence of cognitive ability and judgment on strategic behavior in the beauty contest game (where the Nash equilibrium action is zero). Using the level-k model of bounded rationality, cognitive ability and judgment both predict higher level strategic thinking. However,...