Does Money Illusion Matter? An Experimental Approach

Money illusion means that people behave differently when the same objective situation is represented in nominal or in real terms. To examine the behavioral impact of money illusion we studied the adjustment process of nominal prices after a fully anticipated negative nominal shock in an experimental setting with strategic complementarity. We show that seemingly innocuous differences in payoff presentation cause large behavioral differences. In particular, if the payoff information is presented to subjects in nominal terms, price stickiness and real effects are much more pronounced than when payoff information is presented in real terms. The driving force of differences in real outcomes is subjects' expectation of higher nominal inertia in the nominal payoff condition. Due to strategic complementarity, these expectations induce subjects to adjust rather slowly to the shock.Money illusion, nominal inertia, sticky prices, non-neutrality of money

Money Illusion and Coordination Failure

Economists long considered money illusion to be largely irrelevant. Here we show, however, that money illusion has powerful effects on equilibrium selection. If we represent payoffs in nominal terms, choices converge to the Pareto inefficient equilibrium; however, if we lift the veil of money by representing payoffs in real terms, the Pareto efficient equilibrium is selected. We also show that strategic uncertainty about the other players' behavior is key for the equilibrium selection effects of money illusion: even though money illusion vanishes over time if subjects are given learning opportunities in the context of an individual optimization problem, powerful and persistent effects of money illusion are found when strategic uncertainty prevails.money illusion, coordination failure, equilibrium selection, multiple equilibria, coordination games

Money illusion and coordination failure

Economists long considered money illusion to be largely irrelevant. Here we show, however, that money illusion has powerful effects on equilibrium selection. If we represent payoffs in nominal terms, choices converge to the Pareto inefficient equilibrium; however, if we lift the veil of money by representing payoffs in real terms, the Pareto efficient equilibrium is selected. We also show that strategic uncertainty about the other players' behavior is key for the equilibrium selection effects of money illusion: even though money illusion vanishes over time if subjects are given learning opportunities in the context of an individual optimization problem, powerful and persistent effects of money illusion are found when strategic uncertainty prevails.Money illusion, coordination failure, equilibrium selection, multiple equilibria, coordination games

In Search of Homo Economicus: Behavioral Experiments in 15 Small- Scale Societies,

Homo Economicus, Behavioral Experiments, Small-Scale Societies,

Energy in Agriculture: Energy for Swine Facilities Part II: Alternative Sources of Energy

Recently, there has been some concern about energy utilization in agricultural production. Shortages of natural and LP gas have affected many livestock producers, especially swine producers utilizing LP gas as a supplemental heat source in farrowing facilities. These shortages, coupled with an ever-increasing price for fuel and electricity, have encouraged many producers to begin looking for alternative energy sources

Energy in Agriculture: Energy for Swine Facilities Part I: Energy Conservation

Recently, there has been some concern about energy utilization in agricultural production. Shortages of natural and LP gas have affected many livestock producers, especially swine producers utilizing LP gas as a supplemental heat source in farrowing facilities. These shortages, coupled with an ever*increasing price for fuel and electricity, have encouraged many producers to begin looking for ways to reduce energy consumption

Rampage - New Soybean Variety from Iowa

Rampage, a new high yielding soybean variety with maturity similar to Hark, has promise for reducing cost of production and increasing net return per acre. However, it has performed better in tests outside Iowa than within the state. The authos compare Rampage\u27s characteristics and performance with Hark\u27s and discuss its potential in Iowa