nep-neu New Economics Papers
on Neuroeconomics
Issue of 2019‒09‒30
two papers chosen by

  1. Do You Know That I Know That You Know?: Higher Order Beliefs in Survey Data By Olivier Coibion; Jane Ryngaert; Saten Kumar; Yuriy Gorodnichenko
  2. Cognitive Ability and Observed Behavior in Laboratory Experiments: Implications for Macroeconomic Theory By Nobuyuki Hanaki

  1. By: Olivier Coibion (UT Austin); Jane Ryngaert (Wake Forest University); Saten Kumar (Auckland University of Technology); Yuriy Gorodnichenko (University of California Berkeley)
    Abstract: We implement a new survey of firms, focusing on their higher-order macroeconomic expectations. The survey provides a novel set of stylized facts regarding the relationship between first-order and higher-order expectations of economic agents, including how they adjust their beliefs in response to a variety of information treatments and how these adjustments affect their economic decisions. We show how these facts can be used to calibrate key parameters of noisy-information models with infinite regress as well as to test predictions made by this class of models. The survey also quantifies cognitive limits of agents in the form of level-k thinking. We find little evidence that this departure from infinite regress helps reconcile the data and theory.
    Date: 2019
  2. By: Nobuyuki Hanaki (Université Côte d'Azur; CNRS, GREDEG; IUF)
    Abstract: This paper discusses the relationships between the \measured" cognitive ability of participants and their behavior as observed during laboratory experiments. Based on such relationships, macroeconomic implications of micro-level "boundedly rational" individual behavior will be discussed. The paper also addresses potential problems that arise when insucient attention is paid to large di erences in the measured cognitive ability of participants across several experimental laboratories, in uencing the replicability of existing experimental results but also the interpretation of results from cross-country experimental analyses, and proposes to complement participants' database with individual characteristics.
    Keywords: Cognitive Ability, Laboratory Experiments, Strategic Environment Effect
    JEL: C90 D84
    Date: 2019–09

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