The Nobel-Like Prize in Economic Science, 2018

Economic agents as harried triage nurses grabbing for an immediate diagnosis from the salient features of the case in front of them; Nicola Gennaioli and Andrei Shleifer: Diagnostic Expectations: "Diagnostic expectations are represented by a linear combination of the rational expectations of πœ”π‘‘+1 held at 𝑑 and at 𝑑 βˆ’ 1:

Cross National Differences

It is not that decision-makers compute rational expectations and combine them.... Rather, oversampling representative future states yields the linear combination in (4). This formula reflects a β€œkernel of truth” logic: diagnostic expectations differ from rational expectations by a shift in the direction of the information received at 𝑑, given by [𝔼𝑑(πœ”π‘‘+1) βˆ’ π”Όπ‘‘βˆ’1(πœ”π‘‘+1)]...