We show that observed choices in discounting experiments are consistent with roughly one-half of the subjects using exponential discounting and one-half using quasi-hyperbolic discounting. We characterize the latent data generating process using a mixture model which allows different subjects to behave consistently with each model. Our results have substantive implications for the assumptions made about discounting behavior, and also have significant methodological implications for the manner in which we evaluate alternative models when there may be complementary data generating processes.
This article shows that trend inflation estimation offers crucial insights for the ana-lysis of inflation dynamics and long-term inflation expectations. Focusing on the 12 largest Asian economies, a sample comprising both advanced and emerging economies and different monetary policy regimes, we show that trend inflation analysis can help explain the different impact of the disinflationary shocks across countries. Among countries with inflation below target in recent years, in those with trend inflation low but constant (Australia, New Zealand) low inflation may be lasting, but temporary, while those in which trend inflation has declined (South Korea, Thailand) risk low inflation to become entrenched and a de-anchoring of expectations. Countries like India, Philippines, and Indonesia instead experienced a moderation in inflation and lower trend inflation, while others (China, Taiwan, Hong Kong SAR, Malaysia) were impacted very mildly. That diverse international evidence offers important insights for central banks worldwide.
We elicit individual preferences over social risk. We identify the extent to which these preferences are correlated with preferences over individual risk and the well-being of others. We examine these preferences in the context of laboratory experiments over small, anonymous groups, although the methodological issues extend to larger groups that form endogenously (e.g., families, committees, communities). Preferences over social risk can be closely approximated by individual risk attitudes when subjects have no information about the risk preferences of other group members. We find no evidence that subjects systematically reveal different risk attitudes in a social setting with no prior knowledge about the risk preferences of others compared to when they solely bear the consequences of the decision. However, we also find that subjects are significantly more risk averse when they know the risk preferences of other group members.