IDEAS home Printed from https://ideas.repec.org/h/eme/rexezz/s0193-230620140000017007.html
   My bibliography  Save this book chapter

Evolving Better Strategies for Central Bank Communication: Evidence from the Laboratory

In: Experiments in Macroeconomics

Author

Listed:
  • Jasmina Arifovic

Abstract

This article describes an experiment in a Kydland/Prescott type of environment with cheap talk. Individual evolutionary learning (IEL) acts as a policy maker that makes inflation announcements and decides on actual inflation rates. IEL evolves a set of strategies based on the evaluation of their counterfactual payoffs measured in terms of disutility of inflation and unemployment. Two types of private agents make inflation forecasts. Type 1 agents are automated and they set their forecast equal to the announced inflation rate. Type 2 agents are human subjects who submit their inflation forecast and are rewarded based on their forecast error. The fraction of each type evolves over time based on their performance. Experimental economies result in outcomes that are better than the Nash equilibrium. This article is the first to use an automated policy maker that changes and adapts its rules over time in response to the environment in which human subjects make choices.

Suggested Citation

  • Jasmina Arifovic, 2014. "Evolving Better Strategies for Central Bank Communication: Evidence from the Laboratory," Research in Experimental Economics, in: Experiments in Macroeconomics, volume 17, pages 229-258, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:rexezz:s0193-230620140000017007
    DOI: 10.1108/S0193-230620140000017007
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/S0193-230620140000017007/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: no
    File URL: https://www.emerald.com/insight/content/doi/10.1108/S0193-230620140000017007/full/epub?utm_source=repec&utm_medium=feed&utm_campaign=repec&title=10.1108/S0193-230620140000017007
    Download Restriction: no
    File URL: https://www.emerald.com/insight/content/doi/10.1108/S0193-230620140000017007/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: no
    File URL: https://libkey.io/10.1108/S0193-230620140000017007?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Duffy, John & Heinemann, Frank, 2021. "Central bank reputation, cheap talk and transparency as substitutes for commitment: Experimental evidence," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 887-903.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:rexezz:s0193-230620140000017007. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.