Time and State Dependence in an Ss Decision Experiment

A-Tier
Journal: American Economic Journal: Macroeconomics
Year: 2016
Volume: 8
Issue: 1
Pages: 285-310

Score contribution per author:

1.341 = (α=2.01 / 3 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Flow earnings in a laboratory experiment decline the further a Brownian state variable, z, evolves from its optimal level, z*. Optimal state dependent models predict subjects will pay a fixed cost to return z to z* only when z strays outside a critical inaction region around the optimum. On average, subjects adjust at states remarkably close to optimal threshold levels but, as in the field, do not establish true "state dependent" inaction regions, suggesting significant "time dependent" components in adjustment rules. Structural estimates of subjective observation cost qualitatively account for variation in time dependence observed across treatments. (JEL C91, D21, D80)

Technical Details

RePEc Handle
repec:aea:aejmac:v:8:y:2016:i:1:p:285-310
Journal Field
Macro
Author Count
3
Added to Database
2026-01-25