@techreport{GrafLambsdorff2011role,
abstract = {We carry out an experiment on a macroeconomic price setting game where prices are complements. Despite relevant information being common knowledge and price flexibility we observe significant deviation from equilibrium prices and history dependence. In a first treatment we observe that equilibrium values were obtained in the long run but at the cost of a very slow adjustment and thus history dependence. By reporting a business indicator in a simpler form, subjects were given the chance to coordinate their prices by help of a heuristic in a second treatment. This option was widely taken, bringing about excess volatility and a deviation from equilibrium even in the long run. In a third treatment with staggered pricing we observe, contrary to theoretical predictions, the one-round ahead (publicly known) shock is significant, but future inflation is not. Our findings cast light on price dynamics when subjects have limited computational capacities.},
address = {Passau},
author = {Johann Graf Lambsdorff and Manuel Schubert and Marcus Giamattei},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {E31; C92; 330; Inflation Persistence; Staggered Prices; Sticky Reasoning; New Keynesian Phillips Curve},
language = {eng},
number = {V-63-11},
publisher = {Univ. Passau, Wirtschaftswiss. Fak.},
title = {On the role of heuristics: Experimental evidence on inflation dynamics},
type = {Passauer Diskussionspapiere: Volkswirtschaftliche Reihe},
url = {http://hdl.handle.net/10419/55002},
year = {2011}
}
