MARC Record from Scriblio

LEADER: 02219cam 22003257a 4500
001 2005615179
003 DLC
005 20050113085350.0
007 cr |||||||||||
008 050106s2004 mau sb 000 0 eng
010 $a 2005615179
040 $aDLC$cDLC
050 00 $aHB1
100 1 $aBrunnermeier, Markus Konrad.
245 10 $aOptimal expectations$h[electronic resource] /$cMarkus K. Brunnermeier, Jonathan A. Parker.
260 $aCambridge, MA :$bNational Bureau of Economic Research,$cc2004.
490 1 $aNBER working paper series ;$vworking paper 10707
538 $aSystem requirements: Adobe Acrobat Reader.
538 $aMode of access: World Wide Web.
500 $aTitle from PDF file as viewed on 1/6/2005.
530 $aAlso available in print.
504 $aIncludes bibliographical references.
520 3 $a"This paper introduces a tractable, structural model of subjective beliefs. Forward-looking agents care about expected future utility flows, and hence have higher current felicity if they believe that better outcomes are more likely. On the other hand, biased expectations lead to poorer decisions and worse realized outcomes on average. Optimal expectations balance these forces by maximizing average felicity. A small bias in beliefs typically leads to first-order gains due to increased anticipatory utility and only to second-order costs due to distorted behavior. We show that in a portfolio choice problem, agents overestimate the return on their investment and exhibit a preference for skewness. In general equilibrium, agents' prior beliefs are endogenously heterogeneous. Finally, in a consumption-saving problem with stochastic income, agents are both overconfident and overoptimistic"--National Bureau of Economic Research web site.
650 0 $aConsumer confidence$xMathematical models.
650 0 $aRational expectations (Economic theory)$xMathematical models.
650 0 $aDecision making$xMathematical models.
700 1 $aParker, Jonathan A.
710 2 $aNational Bureau of Economic Research.
830 0 $aWorking paper series (National Bureau of Economic Research : Online) ;$vworking paper no. 10707.
856 40 $uhttp://papers.nber.org/papers/W10707