New Books In Psychology

Inflation expectations – their formation, predictive accuracy, and influence on business price-setting and household consumption – remain one of the great macroeconomic puzzles and challenges to policymakers. As inflation returns to the developed world after a decade-long abeyance, understanding them matters more than ever. In The Behavioral Economics of Inflation Expectations: Macroeconomics Meets Psychology (Cambridge University Press, 2020), Tobias Rötheli has used two (relatively) new disciplines in the study of expectations: behavioral and experimental economics. Instead of applying a top-down version of rationality - like rational expectations - he uses a bottom-up model of rationality, studying individual behavior in the laboratory and then working up from the data. With some surprising results. Tobias Rötheli has been Professor of Macroeconomics at the University of Erfurt since 2000. A graduate of the University of Bern, he has worked at the Swiss National Bank and been a visiting scholar at Harvard,