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From Self-Fulfilling Mistakes to Behavioral Learning Equilibria

In: Sunspots and Non-Linear Dynamics

Author

Listed:
  • Cars Hommes

    (University of Amsterdam and 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.

Suggested Citation

  • Cars Hommes, 2017. "From Self-Fulfilling Mistakes to Behavioral Learning Equilibria," Studies in Economic Theory, in: Kazuo Nishimura & Alain Venditti & Nicholas C. Yannelis (ed.), Sunspots and Non-Linear Dynamics, chapter 0, pages 97-123, Springer.
    • Handle: RePEc:spr:steccp:978-3-319-44076-7_5
    DOI: 10.1007/978-3-319-44076-7_5
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    Keywords

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    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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