Discrete adjustment to a changing environment: Experimental evidence

• 成果类型: Article; Proceedings Paper
• 署名作者: Khaw, Mel Win; Stevens, Luminita; Woodford, Michael
• 署名单位: Columbia University; University System of Maryland; University of Maryland College Park; Columbia University
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2017.09.001
• 发表日期: 2017
• 页码: 88-103
• 关键词: Adjustment hazard; Generalized Ss model; menu costs; rational inattention

摘要

A laboratory experiment illustrates cognitive limitations in decision-making that may be relevant for modeling price-setting. Our subjects systematically depart from the optimal Bayesian response in several respects. Their responses are random, even conditioning on available information. Subjects adjust in discrete jumps rather than after each new piece of information, and by both large and small amounts, contrary to the predictions of an Ss model of optimal adjustment subject to a fixed cost. And they prefer to report round numbers, even when that requires additional effort. A model of inattentive adjustment is found to quantitatively outperform popular alternatives. (C) 2017 Elsevier B.V. All rights reserved.