Visibility Bias in the Transmission of Consumption Beliefs and Undersaving ∗

@inproceedings{Han2018VisibilityBI,
  title={Visibility Bias in the Transmission of Consumption Beliefs and Undersaving ∗},
  author={Bing Han and David Hirshleifer and Johan Walden},
  year={2018}
}
We study how bias in the social transmission process affects contagion of consumption beliefs and behavior. In the model, consumption is more salient than nonconsumption. This visibility bias causes people to perceive that others are consuming heavily and to infer that others have favorable information about future wealth prospects. These inferences increase aggregate consumption. In contrast with other approaches, the visibility bias approach suggests that relatively simple disclosure policy… CONTINUE READING

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