Wishful Thinking / Andrew Caplin, John V. Leahy.

Format:

Book

Author/Creator:

Caplin, Andrew.

Contributor:

National Bureau of Economic Research.

Leahy, John V.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25707.

NBER working paper series no. w25707

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

We model agents who get utility from their beliefs and therefore interpret information optimistically. They may exhibit several biases observed in psychological studies such as optimism, procrastination, confirmation bias, polarization, and the endowment effect. In some formulations, they exhibit these biases even though they are subjectively Bayesian. We argue that wishful thinking can lead to reduced saving, can make possible information-based trade, and can generate asset bubbles.

Notes:

Print version record

March 2019.