Inferential Expectations and the Missing Middle of Price Changes

Univ. of East Anglia, School of Economics Working Paper No. 8/2010

7 Pages Posted: 5 May 2010

See all articles by Timo Henckel

Timo Henckel

Australian National University (Centre for Applied Macroeconomic Analysis)

Gordon Douglas Menzies

University of Technology Sydney (UTS) - School of Finance and Economics

Daniel John Zizzo

University of Queensland - School of Economics

Date Written: May 3, 2010

Abstract

Microeconomic evidence suggests price changes are either very small, or large. The theory of inferential expectations predicts this phenomena if agents use a low test size, reflecting a reluctance to change their minds on the basis of evidence.

Keywords: Inferential Expectations, Prices, Near-rationality

JEL Classification: E31, D84

Suggested Citation

Henckel, Timo and Menzies, Gordon Douglas and Zizzo, Daniel John, Inferential Expectations and the Missing Middle of Price Changes (May 3, 2010). Univ. of East Anglia, School of Economics Working Paper No. 8/2010 , Available at SSRN: https://ssrn.com/abstract=1599529 or http://dx.doi.org/10.2139/ssrn.1599529

Timo Henckel

Australian National University (Centre for Applied Macroeconomic Analysis) ( email )

Canberra ACT 0200
Australia
+61-2-61255540 (Phone)
+61-2-61255570 (Fax)

HOME PAGE: http://apseg.anu.edu.au/staff/thenckel.php

Gordon Douglas Menzies

University of Technology Sydney (UTS) - School of Finance and Economics ( email )

Haymarket
Sydney, NSW 2007
Australia

Daniel John Zizzo (Contact Author)

University of Queensland - School of Economics ( email )

St Lucia
Brisbane, Queensland 4072
Australia

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