The Perils of Over-Optimistic Borrowing

The video explores behavioral economics, focusing on expectations formation and its empirical features. It discusses over-extrapolation, biases, and their implications on asset prices and economic cycles. The historical context of behavioral finance is examined, along with empirical research and policy implications. The role of stereotypes and associative memory in belief formation is also highlighted.

What is the connection between theory and practice in the context of expectations?

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What role does empirical evidence play in understanding expectations?

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What strategies can be implemented to mitigate the impact of biased expectations?

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How do stereotypes influence beliefs about abilities and expectations?

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