From self-fulfilling mistakes to behavioral learning equilibria

Cars Hommes

No 17-018/II, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This essay links some of my own work on expectations, learning and bounded rationality to the inspiring ideas of Jean-Michel Grandmont. In particular, my work on consistent expectations and behavioral learning equilibria may be seen as formalizations of JMG's ideas of self-fulfilling mistakes. Some of our learning-to-forecast laboratory experiments with human subjects have also been strongly influenced by JMG's ideas. Key features of self-fulfilling mistakes are multiple equilibria, excess volatility and persistence amplification.

Keywords: expectations; learning; bounded rationality; chaos; almost self-fulfilling equilibria; laboratory experiments (search for similar items in EconPapers)
JEL-codes: C92 D83 D84 E32 (search for similar items in EconPapers)
Date: 2017-01-30
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp and nep-mac
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https://papers.tinbergen.nl/17018.pdf (application/pdf)

Related works:
Chapter: From Self-Fulfilling Mistakes to Behavioral Learning Equilibria (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20170018

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