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American Economic Review Vol. 100 No. 2 2010

Equilibrium Fictions: A Cognitive Approach to Societal Rigidity

Karla Hoff1; Joseph E. Stiglitz2

1 Development Research Group, World Bank, 1818 H St. NW, Washington, DC 20433. · 2 Columbia Business School, Columbia University, Uris Hall, 3022 Broadway, New York, NY 10027.

open access

Abstract

Recently, economic theorists have investigated the construction of ideologies (see, e.g., Edward L. Glaeser 2005 and Roland Bénabou and Jean Tirole 2006). They have modeled individuals as trading off the benefits of subscribing to a particular ideology or of suppressing certain kinds of information, against the costs that that entails. Recent discussions of macroeconomics have assigned a role to Keynesian "animal spirits"--emotions that influence confidence--giving almost unfettered scope to changes in beliefs.

DOI
10.1257/aer.100.2.141
Volume
100
Issue
2
Pages
141-146
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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