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dc.contributor.authorGraf Lambsdorff, Johannen_US
dc.contributor.authorSchubert, Manuelen_US
dc.contributor.authorGiamattei, Marcusen_US
dc.description.abstractWe 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.en_US
dc.publisher|aUniv. Passau, Wirtschaftswiss. Fak. |cPassauen_US
dc.relation.ispartofseries|aPassauer Diskussionspapiere: Volkswirtschaftliche Reihe |xV-63-11en_US
dc.subject.keywordInflation Persistenceen_US
dc.subject.keywordStaggered Pricesen_US
dc.subject.keywordSticky Reasoningen_US
dc.subject.keywordNew Keynesian Phillips Curveen_US
dc.titleOn the role of heuristics: Experimental evidence on inflation dynamicsen_US
dc.typeWorking Paperen_US

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