How do behavioral assumptions affect structural inference? Evidence from a laboratory experiment


Houser, Daniel ; Winter, Joachim


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URL: https://ub-madoc.bib.uni-mannheim.de/328
URN: urn:nbn:de:bsz:180-madoc-3286
Document Type: Working paper
Year of publication: 2002
The title of a journal, publication series: MEA Discussion Papers
Volume: 05-02
Place of publication: Mannheim
Publication language: English
Institution: School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series: Veröffentlichungen des MEA (Mannheim Research Institute For the Economics of Aging) > MEA Discussion Papers
Subject: 330 Economics
Classification: JEL: D90 C44 D83 ,
Subject headings (SWD): Entscheidungstheorie , Rationale Erwartung
Abstract: We use a laboratory experiment to investigate the effect that assuming rational expectations has on structural inference on a dynamic discrete choice decision problem. Our experimental design induces preferences up to each subject's subjective rates of time preference, leaving unrestricted only this parameter and the decision rule that the subject uses in solving the problem. We analyze the data under the assumption that all subjects use the rational expectations decision rule, and also under weaker behavioral assumptions that allow for heterogeneity in the way people form decisions. We find no evidence that assuming rational expectations distorts inferences about the cross-sectional distribution of discount rates.
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Houser, Daniel ; Winter, Joachim (2002) How do behavioral assumptions affect structural inference? Evidence from a laboratory experiment. Open Access MEA Discussion Papers Mannheim 05-02 [Working paper]
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