000			01195nam a22001457a 4500
999			_c519179 _d519179
008			220214b ||||| |||| 00| 0 eng d
100			_aKohlhas, Alexandre N. and Walther, Ansgar _932075
245			_aAsymmetric attention
260			_aThe American Economic Review
300			_a111(3), Sep, 2021: p.2879-2925
520			_aWe document that the expectations of households, firms, and professional forecasters in standard surveys simultaneously extrapolate from recent events and underreact to new information. Existing models of expectation formation, whether behavioral or rational, cannot account for these observations. We develop a rational theory of extrapolation based on limited attention, which is consistent with this evidence. In particular, we show that limited, asymmetric attention to procyclical variables can explain the coexistence of extrapolation and underreactions. We illustrate these mechanisms in a microfounded macroeconomic model, which generates expectations consistent with the survey data, and show that asymmetric attention increases business cycle fluctuations. – Reproduced
773			_aThe American Economic Review
906			_aECONOMICS
942			_cAR