EconStor >
Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI), Essen >
Ruhr Economic Papers, RWI >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/26819
  
Title:Are expectations formed by the anchoring-and-adjustment heuristic?: an experimental investigation PDF Logo
Authors:Roos, Michael W. M.
Luhan, Wolfgang J.
Issue Date:2008
Series/Report no.:Ruhr economic papers 54
Abstract:Previous experimental investigations have shown that expectations are not perfectly rational due to bias. Traditional adaptive models, however, in many cases do not perfectly describe the formation of expectations either. This paper makes two contributions to the experimental literature on the formation of expectations: First, we investigate whether subjects who have more information about the economic model than in previous studies also form biased expectations. Second, we argue that in some cases macroeconomic expectations might be formed by the anchoring-and-adjustment heuristic, which is well known in psychology. We find that subjects' expectations are biased although the design might be more favorable to rational expectations. The anchoring-and-adjustment model of expectations gets some support by our data, but the best model encompasses both the anchoring-and-adjustment model and the traditional adaptive model.
Subjects:Expectations
heuristics
beliefs
mental models
macroeconomic experiment
JEL:D84
D83
C99
ISBN:978-3-86788-057-2
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des RWI
Ruhr Economic Papers, RWI

Files in This Item:
File Description SizeFormat
574454659.PDF285.56 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/26819

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.