June 2008
Rational Forecasts or Social Opinion Dynamics?
Identification of Interaction Effects in a Business Climate Survey
This publication develops a methodology for examining social interactions in a business climate that challenges conventional notions of rational-based behavior. A stochastic model of social interactions forms the basis of the analysis in conjunction with simulation experiments. The author argues the theory of animal spirit proves to be a significant alternative to rational explanations of swings in consumer opinions and behavior.
© 2008 Kiel Institute for the World Economy.
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Author:
Thomas Lux
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Issue:
1424
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The appendices contain the descriptive statistics and graphs.
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