Expectations are probabilistic beliefs about the future that shape and influence our perception, affect, cognition, and behavior in many contexts. This makes expectations a highly relevant concept ...across basic and applied psychological disciplines. When expectations are confirmed or violated, individuals can respond by either updating or maintaining their prior expectations in light of the new evidence. Moreover, proactive and reactive behavior can change the probability with which individuals encounter expectation confirmations or violations. The investigation of predictors and mechanisms underlying expectation update and maintenance has been approached from many research perspectives. However, in many instances there has been little exchange between different research fields. To further advance research on expectations and expectation violations, collaborative efforts across different disciplines in psychology, cognitive (neuro)science, and other life sciences are warranted. For fostering and facilitating such efforts, we introduce the ViolEx 2.0 model, a revised framework for interdisciplinary research on cognitive and behavioral mechanisms of expectation update and maintenance in the context of expectation violations. To support different goals and stages in interdisciplinary exchange, the ViolEx 2.0 model features three model levels with varying degrees of specificity in order to address questions about the research synopsis, central concepts, or functional processes and relationships, respectively. The framework can be applied to different research fields and has high potential for guiding collaborative research efforts in expectation research.
A planner uses goals to manage a preference disagreement over effort provision with a doer. Goals set output expectations for the doer which affect her behavior due to reference-dependent, ...loss-averse preferences over output. We characterize the planner's optimal goal and explore when it is aspirational versus achievable. Specifically, we show that the optimal goal is achieved by the doer only if the extent of preference disagreement is relatively small. Instead, when the extent of preference disagreement is large, the doer falls short of the optimal goal. The stochasticity of output plays an important role in generating this prediction within our model.
Recently, much attention has been devoted to measuring macroeconomic (expectation) uncertainty and its impact on aggregate economic fluctuations. This paper presents a new qualitative measure of ...macroeconomic expectation uncertainty based on data from a German online survey of consumer expectations. The survey design works well. Elicited expectation uncertainty is related to data volatility and conventional measures of uncertainty as expected. Its dependency on socioeconomic factors is in line with previous evidence based on quantitative uncertainty measures. The new measure offers a very efficient way of eliciting expectation uncertainty and can be used to obtain uncertainty measures on many different expectations at a low cost.
Informed by the goodness-of-fit model, goal theories, and literature on support gaps, this study examines the associations between congruence/discrepancies in parent-adolescent expectations of the ...adolescent’s educational and career goals and adolescents’ perceived overparenting. Data were collected through a survey of 122 parent-adolescent dyads from four high schools in the U.S. Results from second-order polynomial regression with response surface analysis indicated that parental high educational or career goal expectation alone was not necessarily related to adolescents’ perception of overparenting. Rather, adolescents’ perception of overparenting depended on the congruence/discrepancies in parents’ and adolescents’ expectations. Compared to parent-adolescent congruence in high or low expectations, either direction of expectation discrepancies—either parents’ expectation exceeds adolescents’ expectation, or adolescents’ expectation exceeds their parents—was more likely to be associated with adolescents’ perception of overparenting. Parenting intervention and educational programs should acknowledge that discrepancies in parents’ and adolescents’ educational and career goals could potentially contribute to parental overparenting. Fostering communication and negotiation of goal expectations between parents and adolescents may help reduce the practice of overparenting.
Stock market volatility and learning ADAM, KLAUS; MARCET, ALBERT; NICOLINI, JUAN PABLO
The Journal of finance (New York),
February 2016, Letnik:
71, Številka:
1
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We show that consumption-based asset pricing models with time-separable preferences generate realistic amounts of stock price volatility if one allows for small deviations from rational expectations. ...Rational investors with subjective beliefs about price behavior optimally learn from past price observations. This imparts momentum and mean reversion into stock prices. The model quantitatively accounts for the volatility of returns, the volatility and persistence of the price-dividend ratio, and the predictability of long-horizon returns. It passes a formal statistical test for the overall fit of a set of moments provided one excludes the equity premium.
We develop a notion of nonlinear expectation–
G
-expectation–generated by a nonlinear heat equation with infinitesimal generator
G
. We first study multi-dimensional
G
-normal distributions. With ...this nonlinear distribution we can introduce our
G
-expectation under which the canonical process is a multi-dimensional
G
-Brownian motion. We then establish the related stochastic calculus, especially stochastic integrals of Itô’s type with respect to our
G
-Brownian motion, and derive the related Itô’s formula. We have also obtained the existence and uniqueness of stochastic differential equations under our
G
-expectation.
The evolution of many economic variables is affected by expectations that economic agents have with respect to the future development of these variables. We show, by means of laboratory experiments, ...that market behavior depends to a large extent on whether realized market prices respond positively or negatively to average price expectations. In the case of negative expectations feedback, as in commodity markets, prices converge quickly to their equilibrium value, confirming the rational expectations hypothesis. In the case of positive expectations feedback, as is typical for speculative asset markets, large fluctuations in realized prices and persistent deviations from the benchmark fundamental price are likely. We estimate individual forecasting rules and investigate how these explain the differences in aggregate market outcomes.
The Science of Monetary Policy Eusepi, Stefano; Preston, Bruce
Journal of economic literature,
03/2018, Letnik:
56, Številka:
1
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This paper reevaluates the basic prescriptions of monetary policy design in the new Keynesian paradigm through the lens of imperfect knowledge. We show that while the basic logic of monetary policy ...design under rational expectations continues to obtain, perfect knowledge and learning can limit the set of policies available to central banks, rendering expectations management in general more difficult. Nonetheless, the desirability of some form of price-level targeting, inducing inertia in interest-rate policy, paramount under rational expectations, is robust to the assumption of imperfect knowledge.
FISCAL FORESIGHT AND INFORMATION FLOWS Leeper, Eric M.; Walker, Todd B.; Yang, Shu-Chun Susan
Econometrica,
20/May , Letnik:
81, Številka:
3
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News—or foresight—about future economic fundamentals can create rational expectations equilibria with non-fundamental representations that pose substantial challenges to econometric efforts to ...recover the structural shocks to which economic agents react. Using tax policies as a leading example of foresight, simple theory makes transparent the economic behavior and information structures that generate non-fundamental equilibria. Econometric analyses that fail to model foresight will obtain biased estimates of output multipliers for taxes; biases are quantitatively important when two canonical theoretical models are taken as data generating processes. Both the nature of equilibria and the inferences about the effects of anticipated tax changes hinge critically on hypothesized information flows. Different methods for extracting or hypothesizing the information flows are discussed and shown to be alternative techniques for resolving a non-uniqueness problem endemic to moving average representations.
We estimate a simple reduced-form model of expectation formation with three distinct deviations from full-information rational expectations that combines underreaction with overreaction to new ...information. In particular, forecasts are sticky, extrapolate the most recent news about the current period, and depend on the lagged consensus forecast about the period being forecast. We find that all three biases are present in the Survey of Professional Forecasters as well as in the Livingston Survey, and that their magnitudes depend on the forecasting horizon. We also stress the point that using the past consensus forecast to form expectations is a reasonable thing to do if a forecaster is not able to come up with full-information rational expectations all by herself. Finally, we show that forecasters that have more sticky expectations generally tend to rely less on the lagged consensus forecast but extrapolate news about the current period more.
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