nep-neu New Economics Papers
on Neuroeconomics
Issue of 2024‒01‒01
two papers chosen by

  1. Parenting Styles, Socioeconomic Status and (Non-)Cognitive Skills By Kugler, Philipp; Kroczek, Martin; Zühlke, Anne
  2. Insensitive Investors By Charles, Constantin; Frydman, Cary; Kilic, Mete

  1. By: Kugler, Philipp; Kroczek, Martin; Zühlke, Anne
    JEL: J13 J24 J62
    Date: 2023
  2. By: Charles, Constantin; Frydman, Cary; Kilic, Mete
    Abstract: We experimentally study the transmission of subjective expectations into actions. Subjects in our experiment report valuations that are far too insensitive to their expectations, relative to the prediction from a frictionless model. We propose that the insensitivity is driven by a noisy cognitive process that prevents subjects from precisely computing asset valuations. The empirical link between subjective expectations and actions becomes stronger as subjective expectations approach rational expectations. Our results highlight the importance of incorporating weak transmission into belief-based asset pricing models. Finally, we discuss how cognitive noise can provide a microfoundation for inelastic demand in the stock market.
    Keywords: 1749824
    JEL: F3 G3
    Date: 2023–10–02

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