We link two biased belief formation approaches: non-Bayesian updating rules and model misspecification. Each approach has advantages: updating rules transparently capture the underlying bias and are identifiable from belief data; misspecified models are ‘complete’ and amenable to general analysis.
- Speaker
- Date
- Friday 9 Feb 2024, 15:30 - 16:45
- Type
- Seminar
- Room
- T3-03
- Building
- Mandeville Building
(joint with Aislinn Bohren)
We show misspecified models can be decomposed into an updating rule and forecast of anticipated future beliefs. We derive necessary and sufficient conditions for an updating rule and forecast to have a unique misspecified model representation and construct it. This highlights the belief restrictions implicit in the misspecified model approach. Finally, we explore two ways to select forecasts: introspection-proof and naive-consistent.
About the speaker
Daniel is currently Assistant Professor of Economics at Aalto University, and Research Affiliate in Organizational Economics at the Center for Economic Policy and Research Development (CEPR). His research interests are in the fields of microeconomic theory, in particulardynamic games, reputation, learning, and model misspecification. He obtained his PhD at the University of Pennsylvania and has published in Econometrica, AEJ: Micro, and RAND.
Registration
If you would like to book a bilateral or join for lunch on Friday or join for dinner on Friday evening, please send an email to boring@ese.eur.nl.
