Do You Know That I Know That You Know?: Higher Order Beliefs in Survey Data
Saten Kumar and
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Jane Ryngaert: Wake Forest University
No 280, 2019 Meeting Papers from Society for Economic Dynamics
We implement a new survey of firms, focusing on their higher-order macroeconomic expectations. The survey provides a novel set of stylized facts regarding the relationship between first-order and higher-order expectations of economic agents, including how they adjust their beliefs in response to a variety of information treatments and how these adjustments affect their economic decisions. We show how these facts can be used to calibrate key parameters of noisy-information models with infinite regress as well as to test predictions made by this class of models. The survey also quantifies cognitive limits of agents in the form of level-k thinking. We find little evidence that this departure from infinite regress helps reconcile the data and theory.
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Working Paper: Do You Know That I Know That You Know...? Higher-Order Beliefs in Survey Data (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed019:280
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More papers in 2019 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
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