Hard to overstate how revelatory this paper was for me — one takeaway I had from it was "small fixed costs can really deter people from optimizing."
Which made me think about a few other recent papers where fixed optimization costs are a key ingredient:
Which made me think about a few other recent papers where fixed optimization costs are a key ingredient:
Reposted from
Florian Ederer
Some of the most important lottery anomalies from the behavioral risk literature (e.g., probability weighting and loss aversion) actually have nothing to do with risk.
They also arise in perfectly deterministic settings.
Lead article in the latest AER issue:
www.aeaweb.org/articles?id=...
Comments
=> response of the economy to stimulus checks is very sensitive to the size of those checks
https://joelflynn.com/wp-content/uploads/2024/10/QF_web_oct24.pdf
https://tinyurl.com/47mt6m2k
@basilhalperin.com shows us that if price rigidities are due to fixed costs, something like NGDP targeting is optimal monetary policy (rather than inflation targeting)
https://basilhalperin.com/papers/halperin_jmp.pdf
https://jadhazell.github.io/website/draft_conflicts.pdf
https://www.nber.org/papers/w33233?utm_campaign=ntwh&utm_medium=email&utm_source=ntwg15
https://econweb.umd.edu/~stevens/papers/MJS_Rigidities.pdf
The fixed costs of wage change papers describe their costs as “negotiation” costs, but I am inclined to think re-optimization costs are also important.
https://cowles.yale.edu/sites/default/files/2022-10/SSRN-id3686935.pdf