Inferential Expectations and the Missing Middle of Price Changes

Timo Henckel (), Gordon Menzies and Daniel Zizzo

No 8, University of East Anglia Applied and Financial Economics Working Paper Series from School of Economics, University of East Anglia, Norwich, UK.

Abstract: Microeconomic evidence suggests price changes are either very small, or large. The theory of inferential expectations predicts this phenomena if agents use a low test size, reflecting a reluctance to change their minds on the basis of evidence.

Keywords: inferential Expectations; prices; near-rationality (search for similar items in EconPapers)
JEL-codes: D84 E31 (search for similar items in EconPapers)
Date: 2010-05-03
New Economics Papers: this item is included in nep-cba and nep-mac
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