Prominent Numbers and Ratios in Exchange Rate Determination: Field and Laboratory Evidence

Juergen von Hagen, Sebastian Kube, Johannes Kaiser, Reinhard Selten and Robin Pope

No 29/2006, Bonn Econ Discussion Papers from University of Bonn, Bonn Graduate School of Economics (BGSE)

Abstract: In the decision-making process, there is a stage when choosers evaluate alternatives. Evaluation is complex especially when it involves the future exchange rate. In the complexity of predicting the future exchange rate, choosers may use prominent numbers and ratios. We furnish field and experimental evidence of major effects on exchange rate determination from prominent numbers and ratios that constitute nominal equalities and historical benchmarks. Theorizing and estimation of exchange rates can be enhanced via SKAT, the Stages of Knowledge Ahead Theory that allows prominent numbers and prominent ratios to be taken into account consistently in constructing decision models.

Keywords: nominalism; money illusion; unpredictability; experiment; SKAT the Stages of Knowledge Ahead Theory; prominent numbers; prominent ratios (search for similar items in EconPapers)
JEL-codes: D80 D81 F31 F33 (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bonedp:292006

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