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Cited by 718

The DOI matches its Crossref record; 5 of the 5 references it cites were found in a registry or an index.

Optimal Expectations

Brunnermeier, Markus K, Parker, Jonathan A·2005·American Economic Review
DOI 10.1257/0002828054825493
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Abstract

Forward-looking agents care about expected future utility flows, and hence have higher current felicity if they are optimistic. This paper studies utility-based biases in beliefs by supposing that beliefs maximize average felicity, optimally balancing this benefit of optimism against the costs of worse decision making. A small optimistic bias in beliefs typically leads to first-order gains in anticipatory utility and only second-order costs in realized outcomes. In a portfolio choice example, investors overestimate their return and exhibit a preference for skewness; in general equilibrium, investors' prior beliefs are endogenously heterogeneous. In a consumption-saving example, consumers are both overconfident and overoptimistic.

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Metadata

Authors
Brunnermeier, M. K., & Parker, J. A.
Venue
American Economic Review
Publisher
American Economic Association
Published
2005-08-01
Volume
95
Issue
4
Pages
1092-1118
ISSN
0002-8282 (ISSN-L)
DOI
10.1257/0002828054825493
OpenAlex
W4253403294
Cited by
718
References
5
FWCI
6.62
Type
journal article
Language
en
Open access
closed

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CoChat. (2026). Citation check: Optimal Expectations. https://app.cochat.ai/papers/10.1257/0002828054825493
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Brunnermeier, M. K., & Parker, J. A. (2005). Optimal Expectations. American Economic Review. https://doi.org/10.1257/0002828054825493

Data sources

Bibliographic data: Semantic Scholar, OpenAlex, Crossref.

Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).

Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.