search query: @freeterm bounded rationality / total: 4
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| Author: | Berrada, T. |
| Title: | Bounded rationality and asset pricing with intermediate consumption |
| Journal: | Review of finance
2009 : OCT, VOL. 13:4, p. 693-725 |
| Index terms: | models assets pricing information |
| Freeterms: | bounded rationality intermediate consumption |
| Language: | eng |
| Abstract: | In this paper, a pure exchange economy with incomplete information is considered. Learning bias and over- or under-reacting to the new information arrival is displayed by some agents. It is shown under which conditions biased agents (henceforth as: b-agents) survive over a finite horizon. In addition, the distribution of irrational agents consumption shares is studied. Also, the agents' impact on prices is shown to be increasing in their consumption share. It is concluded that b-agents can significantly influence equilibrium quantities. |
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