Agent-based learning in 'Islands' with 'Sticky Information': an explanation for the persistence of real effects

Joshy Z Easaw, Atanu Ghoshray

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

This paper outlines a model where a householder forms subjective expectations about his income by "anchoring" on a professional's forecasts of the aggregate economy. Hence, the householder is able to form relative (or real) income expectations. However, he observes the professional's forecasts imperfectly and only adjusts his expectations partially. Using the "Lucas-Phelps Island" scenario, set in the context of households, we show how persistence of real effects could arise in such a scenario.
Original languageEnglish
Pages (from-to)263-268
Number of pages6
JournalJournal of Money, Credit and Banking
Volume38
Issue number1
Publication statusPublished - 2006

Keywords

  • Speculations (D840)
  • Learning
  • Search
  • Expectations
  • Communication
  • Information and Knowledge
  • Belief (D830)

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