Sticky Information Research Articles

Imperfect information and tourist's response to natural disasters

AbstractThis study investigates the international behaviour of individuals with imperfect information. We used both local and international tourist data pertaining to Hakone in Japan to focus on two natural disasters: the Great East Japan Earthquake (GEJE) and volcanic activity on Mount Hakone. Hotel guests' responses to these shocks were estimated using smooth local projections. The responses of less‐informed foreign guests differed from those of well‐informed domestic guests. Because of imperfect information, such as sticky information, rational inattention and selected information through news media, the GEJE and its aftermath decreased the number of foreign guests at a rate greater and more persistent than that of domestic guests. Conversely, changes in volcanic alert levels slightly affect foreign guests because of the absence of information (or rational inattention); however, they have negative and persistent effects on domestic guests.

Diligent forecasters can make accurate predictions despite disagreeing with the consensus

We follow the sticky information framework and derive two novel model implications that both ex-ante forecast disagreement and ex-post forecast accuracy are associated with the degree of information stickiness at an individual level. Using micro-level forecast data from the G7 countries, we show that professional forecasters are persistently heterogeneous. More importantly, we find supportive evidence that forecast accuracy is negatively associated with information stickiness, while forecast disagreement increases at a slowing rate as individual information stickiness increases. The relationship between forecast disagreement and individual information stickiness is also affected by the degree of average information stickiness and the persistence of target macroeconomic variables. This paper contributes to the literature by providing theoretical linkages between the heterogeneous expectation formation process and information stickiness at an individual level.

Web3 toolkits: A user innovation theory of crypto development

The development of Web3 — a stack of decentralised technologies underpinned by blockchains — isn’t simply a technical or financing challenge, it is also a problem of innovation and entrepreneurial discovery. In this paper we apply the lens of user innovation toolkit theory to the development of Web3. Toolkits are an organizational design solution to an innovation problem with sticky and local information. Our aim is to explore how toolkits theory applies to Web3 innovation, proposing that Web3 innovation is being organized through toolkits (e.g., blockchains, token standards, DAO frameworks) that enable efficient organization of sticky information to facilitate innovation. The contribution of this paper is the first application of toolkits theory to Web3, reframing its development as a problem of entrepreneurship and innovation in the context of distributed information. We provide implications for the role of developers as user innovators, the economic problem of emergent toolkit stacking, and the design of toolkit business models.

Identifying the source of information rigidities in the expectations formation process

Coibion and Gorodnichenko (2015) provide a useful framework to test the null hypothesis of full-information rational expectations against two popular classes of information rigidities, sticky information (SI) and noisy information (NI). However, the observational equivalence of SI and NI in average forecast errors gives no power in the test for one against the other. We identify the source of information rigidities by estimating the equations for the average forecast errors and variance of forecasts. The results show the importance of both SI and NI, but favor a type of NI in which agents can quickly learn the underlying state.

Learning with limited memory: Bayesianism vs heuristics

Bayesian analysis is considered the optimal way of processing information. However, it often leads to problems for decision-makers with constrained cognitive capacity. Modeling such constrained capacity by finite automata, we answer two questions in the context of Wald's (1947) sequential analysis, namely in what environments is optimal Bayesian analysis possible even with constraints; also, when it is not possible what simplifications in the analysis enable us to obtain a satisfactory outcome. We identify two features of the simplified analysis: information stickiness (ignoring information) and rule stickiness (ignoring small differences in the environment).

Evaluation and indirect inference estimation of inattentive features in a New Keynesian framework

AbstractWe test the standard New Keynesian (NK) dynamic stochastic general equilibrium (DSGE) model with and without inattentiveness features, where inattentiveness is modeled either in the form of sticky information (SI) or imperfect information (IF) data revision. All models are estimated and tested by indirect inference. The estimated model with sticky information somewhat outperformed the estimated NK model with full‐information rational expectation (FIRE), though both passed the test easily, while the model with IF data revision was strongly rejected.

Inflation expectations and the Phillips curve: an encompassing framework

This paper contrasts empirically four leading models of inflation dynamics – the Accelerationist Phillips curve (APC), New Keynesian Phillips curve (NKPC), Hybrid Phillips curve (HPC) and Sticky Information Phillips curve (SIPC). We employ an encompassing Phillips curve specification that allows us to derive tests for these models within a single framework. Using the generalized method of moments (GMM) estimator, the evidence suggests that the restrictions implied by the NKPC, HPC, and SIPC are rejected for the period after the Real Plan in Brazil. Only the restrictions implied by the APC are not rejected. However, when we construct confidence regions that are robust to weak instruments, it is not possible to reject any of the Phillips curve specifications, including the NKPC.

Does inattentiveness matter for DSGE modeling? An empirical investigation

The purpose of this paper is to investigate the empirical performance of the standard New Keynesian dynamic stochastic general equilibrium (DSGE) model in its usual form with full-information rational expectations and compare it with versions assuming inattentiveness- namely sticky information and imperfect information data revision. Using a Bayesian estimation approach on US quarterly data (both real-time and survey) from 1969 to 2015, we find that the model with sticky information fits best and is the only one that can generate the delayed responses observed in the data. The imperfect information data revision model is improved fits better when survey data is used in place of real-time data, suggesting that it contains extra information. • The paper considers the full-information rational expectations with two other forms of inattentive expectations, namely sticky information and imperfect information data revision. • The paper extends empirical evidence using both real-time and survey data to verify which model with the inattentive feature best replicates actual outcomes. • This is the first empirical analysis to compare models with and without expectations inattentiveness. • The New Keynesian DSGE model with an inattentive feature is a better fit with the real-time data using Bayesian estimation. • The imperfect information data revision model performs better when we substitute the real-time data with the survey data.

Proposal for Management Method for Industry–Academia Collaborative Research using PoC Framework

To generate innovation from research results generated by universities and public research institutions, the research results should be transferred to companies. However, given that research results from universities and public research institutions are not initially intended for commercialization, additional research, and development are required to commercialize them. In addition, every organization has different objectives and characteristics, and re-search results are highly sticky information, making technology transfer difficult. Therefore, rather than simply providing information, technology transfer may be conducted through collaboration, such as collaborative research. Existing studies have proposed a framework for analyzing collaborative research between industry and academia from a proof-of-concept perspective and have analyzed the success factors. This present study proposes a method of using this framework (PoC framework) for the management of collaborative research be-tween industry and academia for the purpose of commercialization. The proposed method can fill the knowledge gaps between industry and academia. The study found that a com-bination of the PoC framework and other frameworks (i.e. Value Proposition Canvas) is effective in the management method.

Beyond Benefits: Uncertainty and Sticky Information Costs

Beyond Benefits: Uncertainty and Sticky Information Costs

How Far Can the Message Go Through Online Communication

The phenomenon of information stickiness is widely seen by a declined information vitality and is hypothesised with multiple causes, but research on it is scant. Therefore, it is necessary to unmask the myth and concretise the concept. This research adopts an agent-based simulation model incorporating information accumulation, attitudinal proposition, interest, and preference for searching and matching information to determine how identified antecedents affect four defined symptoms of information stickiness in a simulated virtual community. This paper demystifies these symptoms, which are embedded in various personal, relational, and environmental settings. Some aggregate-level outcomes of consumers’ message-triggered responses emerge as an endogenous outcome of information stickiness. Analysis of data is visualised and quantified for its longitudinal changes in information acquisition, group affiliation, information growth, and the system's vitality.

Incorporation of sticky information and product diversification into static game of open innovation

Platform economics has promoted open innovation through sufficient channels to reveal and exchange knowledge with experts or valued customers. However, innovation also suffers from information stickiness and product diversification risks. In order to design an innovation strategy on a platform, this study incorporated these risks into game models of open innovation and proposed strategies to promote open innovation and welfare through equilibrium analysis. On the basis of the literature analysis of these risks, stochastic pay-off functions were constructed to regulate and stabilize the knowledge exchange flows. From equilibrium analysis of the game models, we conclude that: 1) stickiness and diversification are critical factors for open innovation on a platform; 2) at the beginning, a broad search is necessary to acquire diverse knowledge; at the middle stage, regulation of knowledge exchange is critical to achieving equilibrium and higher profits; and 3) global welfare could be elevated through adjustment of knowledge size and friction of communication.

Identifying the Source of Information Rigidities in the Expectations Formation Process

Coibion and Gorodnichenko (2015) provide a useful framework to test the null hypothesis of full-information rational expectations against two popular classes of information rigidities, sticky information (SI) and noisy information (NI). However, the observational equivalence of SI and NI in average forecast errors gives no power in the test for one against the other. We identify the source of information rigidities by estimating the equations for the average forecast errors and variance of forecasts. The results show the importance of both SI and NI, but favor a type of NI in which agents quickly learn the underlying state.

Complex Fluctuation of Power Price in Dual-Channel and Multienergy Supply Chain Based on Sticky Expectation

According to the current power supply focused reform in China, a dual-channel and multienergy supply chain model is constructed. The supply chain has a new energy enterprise, a traditional energy enterprise, and the State Grid that is the retailer. New energy company and traditional energy company sell electricity to the State Grid at wholesale prices, and at the same time they enter the market to retail power products. Multiequilibriums and their practical significance are discussed. The complex dynamic is investigated using a bifurcation diagram, Lyapunov exponent, parameter basin, and fractal dimension. In this multilayer supply chain network, the price adjustment of the State Grid will make the entire supply chain face greater volatility risks, and dual-channel suppliers, that is, new energy and traditional energy companies are also involved in this volatility. Further, considering the sticky information, the sticky expectation of electricity price is built for studying the lagging electricity price. The dynamic characteristics of the sticky model are investigated, and new phenomena are discovered: 3-orbit bifurcation and mutation appear with fractals. This means that prices continue to swing and oscillate on three tracks. Through comparison of the fractal dimension, an important conclusion is discovered: the purpose of sticky expectations for electricity prices is to stabilize price fluctuations, but sticky expectations make the market more complicated. The article provides a strategic reference for exploring the power market in China.

On the role of dependence in sticky price and sticky information Phillips curve: Modelling and forecasting

Understanding the role of sticky price and sticky information for inflation dynamics is a key issue in economics. The literature has treated the two forms of stickiness as independent. This paper proposes a new dual stickiness Phillips curve based on dependence among the events of setting prices and updating information. Using US data over the period 1947Q1–2020Q1, the new model is scrutinized against a dual stickiness model without dependence, a pure sticky price model, and a pure sticky information model, through in- and out-of-sample analyses. The results show: (i) the new model outperforms the model without dependence in-sample; (ii) the dual stickiness models perform similarly out-of-sample; and (iii) the pure sticky models yield the worst forecasts. The results have some implications for policy makers and practitioners. A policy maker may consider the new model given its performance in- and out-of-sample, while a practitioner may prefer the model without dependence, given its lesser complexity and its competitive forecasting performance.

Identifying the source of information rigidities in the expectations formation process

Coibion and Gorodnichenko (2015) provide a useful framework to test the null hypothesis of full-information rational expectations against two popular classes of information rigidities, sticky information (SI) and noisy information (NI). However, the observational equivalence of SI and NI in average forecast errors gives no power in the test for one against the other. We identify the source of information rigidities by estimating the equations for the average forecast errors and variance of forecasts. The results show the importance of both SI and NI, but favor a type of NI in which agents quickly learn the underlying state.

Output Comovement and Inflation Dynamics in a Two‐Sector Model with Durable Goods: The Role of Sticky Information and Heterogeneous Factor Markets

AbstractIn the United States, the inflation and output of durable and nondurable goods respond to a monetary policy shock in the same direction with a delay. However, the existing New Keynesian dynamic stochastic general equilibrium models that generate the positive output comovement cannot explain this delayed response in sectoral inflation. We show that adding sticky information to both goods along with heterogeneous factors of production can explain the observed patterns in sectoral inflation and output. Moreover, in line with recent empirical findings, the estimated information stickiness is larger for housing than for nondurable goods and services.

Hong Kong's New Keynesian Phillips Curve: Sticky information or sticky price?

AbstractThis paper studies the validity of Hong Kongʼs New Keynesian Phillips Curve, focusing on the sticky price and the sticky information model. Drawing on Hong Kongʼs quarterly data 1982Q1–2017Q2, we find that (a) both models can account for the cyclical movements of the observed inflation dynamics, but the sticky information model appears to be better in predictive performance; (b) the Hong Kong economy is characterized by substantial price rigidity but very low information rigidity; and (c) the sticky‐information model highlights the importance of past expectations in explaining the inflation dynamics in Hong Kong.

ЕФЕКТИВНІСТЬ МОНЕТАРНОЇ ПОЛІТИКИ ЦЕНТРАЛЬНИХ БАНКІВ У СФЕРІ ФІНАНСОВОЇ АКТИВНОСТІ ДОМОГОСПОДАРСТВ КРІЗЬ ПРИЗМУ НОВОЇ КЕЙНСІАНСЬКОЇ ШКОЛИ

The monetary policy of the central bank of any state is designed to regulate the money supply through the use of many monetary instruments. The use of the discount rate, foreign exchange interventions, the reduction or increase of required bank reserves according to classical Keynesianism should influence the intertemporal choice of households. However, not all tools have the same effect on household choices and therefore studying the effectiveness of their use is relevant. The purpose of the article is to study the impact of the central bank's monetary policy on financial and investment activities of the population. Determining the effectiveness of monetary policy instruments used by central banks through the prism of the new Keynesian school. The following scientific methods were used during the research: analysis and synthesis, deductive method, analogy method, modeling, system approach, abstraction method. Monetary policy of central banks affects the economy. Changes in the discount rate increase the number of loans and deposits, change interest rates in the loan capital market. In the long run, this affects the dynamics and growth rates of loans and deposits. However, household income and consumption levels have a significant impact on household decisions about current and future consumption, intensification or, conversely, reduction of financial and investment activities. Reducing the discount rate to 6% did not lead to an increase in retail deposits and the number of securities. It is established that the decrease in inflation did not lead to an increase in incomes and consumption of goods and services. Financial activity is most affected by income levels and wealth. The impact of monetary instruments on households is adjusted and even often offset by «sticky prices», «sticky wages», «sticky information» and income heterogeneity in the structure of households. According to the study, the reduction of the discount rate did not affect the increase in deposits and savings in securities of the population. Therefore, when formulating monetary policy, the NBU should also take into account the relationship with income and wages, between liquid and illiquid assets, the marginal propensity to consume with low incomes, taking into account the intermediate choice, «sticky prices», «sticky wages» and «sticky information».

International Information Disparity, Sticky Information, and Economic Behavior: Tourist's Response to Region-Specific Shocks

International Information Disparity, Sticky Information, and Economic Behavior: Tourist's Response to Region-Specific Shocks