Can agents with causal misperceptions be systematically fooled?

Spiegler, Ran (2016) Can agents with causal misperceptions be systematically fooled? CFM discussion paper series (CFM-DP2016-19). Centre For Macroeconomics, London, UK.

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Abstract

Using data on house sales and inventories, this paper shows that housing-market dynamics are driven mainly by listings and less so by transaction speed, thus the decision to move house is key to understanding the housing market. The paper builds a model where moving house is essentially an investment in match quality, implying that moving depends on macroeconomic developments and housing-market conditions. The endogeneity of moving means there is a cleansing effect — those at the bottom of the match quality distribution move first — which generates overshooting in aggregate variables. The model is applied to the 1995–2004 housingmarket boom.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://www.centreformacroeconomics.ac.uk/Home.aspx
Additional Information:	© 2016 The Authors
Divisions:	Centre for Macroeconomics
Subjects:	H Social Sciences > HB Economic Theory
Date Deposited:	13 Dec 2017 08:35
Last Modified:	11 Dec 2024 19:23
URI:	http://eprints.lse.ac.uk/id/eprint/86228

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