General Equilibrium Dynamics with Naïve and Sophisticated Hyperbolic Consumers in an Overlapping Generations Economy

Datos Bibliográficos

ID9728478
AutoresTakeshi Ojima (0000-0001-6888-0698, Hitotsubashi University, autor de correspondencia)
Año2018
Volumen85
Número338
Páginas281-304
Fecha de publicación2018-04-01
Peer ReviewedSí
Open AccessSí
TipoARTICLE
RevistaEconomica (JOURNAL)
Identificadores de la revistaISSN: 0013-0427 • E-ISSN: 1468-0335
EditorialWiley (PUBLISHER • GB)
DOI10.1111/ecca.12242
OpenAlexW1560548334
IdiomaEN
Referencias citadas25

Using an overlapping generations model, this paper describes interactions between naïve and sophisticated hyperbolic discounters in general equilibrium. The naïfs, who overestimate their propensity to save and hence overforecast equilibrium asset prices, in the next period are exploited through capital transactions by the sophisticates, who correctly forecast future asset prices by incorporating the naïfs’ misforecasts. Due to the capital losses, the naïfs fall into bankruptcy when they are highly present‐biased, highly patient, and small in proportion. Under permissive conditions, the equilibrium is shown to be globally stable and Pareto‐inefficient in the ex post sense

Asset (computer security) · Bankruptcy · Capital (architecture) · Econometrics · Economics · General equilibrium theory · Mathematical economics · Microeconomics · Monetary economics · Overlapping generations model · Complex Systems and Time Series Analysis · Computer Science · Economic theories and models · Economic Theory and Policy · Finance