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Do You Know That I Know That You Know...? Higher-Order Beliefs in Survey Data / Olivier Coibion, Yuriy Gorodnichenko, Saten Kumar, Jane Ryngaert.
- Format:
- Book
- Author/Creator:
- Coibion, Olivier.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w24987.
- NBER working paper series no. w24987
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2018.
- Summary:
- We implement a new survey of firms, focusing on their higher-order macroeconomic expectations. The survey provides a novel set of stylized facts regarding the relationship between first-order and higher-order expectations of economic agents, including how they adjust their beliefs in response to a variety of information treatments and how these adjustments affect their economic decisions. We show how these facts can be used to calibrate key parameters of noisy-information models with infinite regress as well as to test predictions made by this class of models. The survey also quantifies cognitive limits of agents in the form of level-k thinking. We find little evidence that this departure from infinite regress helps reconcile the data and theory.
- Notes:
- Print version record
- September 2018.
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