TY  - JOUR
U1  - Zeitschriftenartikel, wissenschaftlich - begutachtet (reviewed)
A1  - Herzog, Bodo
T1  - Anchoring of expectations : the role of credible targets in a game experiment
JF  - Journal of economic & financial studies
N2  - This paper provides new evidence on the formation and anchoring of inflation expectations. I conduct a game experiment and analyze the adjustment as well as the impact of credible targets on expectations. In addition, I evaluate the idiosyncratic determinants on the formation of expectations. The analysis reveals six results: First, I find evidence that long-term inflation expectations are firmly anchored to a credible target. Second, a temporary deviation due to unexpected monetary policy might trigger a decline in credibility, and third a de-anchoring of expectations due to uncertainty. Fourth, I find that people change their expectations little if a credible target exists. Fifth, expectations exhibit a large degree of time-variance only in environments without a target. Sixth, the dynamic adjustment to an ‘incomplete’ equilibrium, which is theoretically unstable, is nevertheless rapid and persistent in case of credible targets. All in all, I demonstrate a unique game setup with contributions to both experimental and monetary economics.
KW  - central banking
KW  - experimental evidence
KW  - guessing game
KW  - inflation expectations
Y1  - 2015
UN  - https://nbn-resolving.org/urn:nbn:de:bsz:rt2-opus4-5432
SN  - 2379-9463
SS  - 2379-9463
U6  - https://doi.org/10.18533/jefs.v3i6.169
DO  - https://doi.org/10.18533/jefs.v3i6.169
VL  - 3
IS  - 6
SP  - 1
EP  - 15
S1  - 15
PB  - LAR Center Press
CY  - Toronto
ER  -