Myopia and Anchoring
We develop an equivalence between the equilibrium effects of incomplete information and those of two behavioral distortions: myopia, or extra discounting of the future; and anchoring of current behavior to past behavior, as in models with habit persistence or adjustment costs. We show how these distortions depend on higher-order beliefs and GE mechanisms, and how they can be disciplined by evidence on expectations. We finally illustrate the use of our toolbox with a quantitative application in the context of inflation, a bridge to the HANK literature, and an extension to networks.
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Copy CitationGeorge-Marios Angeletos and Zhen Huo, "Myopia and Anchoring," NBER Working Paper 24545 (2018), https://doi.org/10.3386/w24545.Download Citation
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Published Versions
George-Marios Angeletos & Zhen Huo, 2021. "Myopia and Anchoring," American Economic Review, American Economic Association, vol. 111(4), pages 1166-1200, April. citation courtesy of 
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