CeDEx
Centre for Decision Research and Experimental Economics

CeDEx Seminar - Daniel Schunk (University of Mainz)

Location
A40 Sir Clive Granger Building
Date(s)
Wednesday 6th November 2019 (14:00-15:00)
Description

Heterogeneous Agents in Dynamic Choice: Theory and Experimental Evidence

Abstract: A growing literature in macroeconomics and finance argues that the cross-sectional distribution of heterogeneous agents is decisive for aggregate economic outcomes, yet empirically substantiated information on the nature, origins, and temporal stability of behavioral heterogeneity is unavailable. Applying structural estimation to laboratory panel data from an intertemporal choice task, I obtain a parsimonious representation of behavioral heterogeneity and provide three insights: First, a small set of both rational and rule of thumb types explains 92% of all observed decisions. Second, there is evidence for type stability, i.e. many subjects’ types remain unchanged over several weeks. Third, time pressure affects the type distribution and halves the fraction of rational agents. Hence, this paper provides a microfoundation of the assumption of temporally stable heterogeneous agents, and it shows that generic features of the decision environment can fundamentally affect aggregate outcomes by changing the cross-sectional distribution of heterogeneous agents.

Centre for Decision Research and Experimental Economics

Sir Clive Granger Building
University of Nottingham
University Park
Nottingham, NG7 2RD

telephone: +44 (0)115 951 5458
Enquiries: jose.guinotsaporta@nottingham.ac.uk
Experiments: cedex@nottingham.ac.uk