Least squares learning? Evidence from the laboratory

• Published in: Journal of economic dynamics & control Vol. 172; p. 104980
• Main Authors: Bao, Te, Dai, Yun, Duffy, John
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01.03.2025
• Subjects: Behavioral macroeconomics; Experimental economics; Learning-to-forecast experiment; Least squares learning; Rational expectations equilibrium; C53; D84; Experimental economics; Learning-to-forecast experiment; Behavioral macroeconomics; Rational expectations equilibrium; Least squares learning; C91; D83
• ISSN: 0165-1889
• DOI: 10.1016/j.jedc.2024.104980

We report on an experiment testing the empirical relevance of least squares (LS) learning, a common way of modelling how individuals learn a rational expectations equilibrium (REE). Subjects are endowed with the correct perceived law of motion (PLM) for a price level variable they are seeking to for...