@article{36c4a8cedb6b446fb08228d01e465bd9,
title = "Survival and long-run dynamics with heterogeneous beliefs under recursive preferences",
abstract = "I analytically characterize the long-run behavior of an economy with two types of agents who differ in their beliefs and are endowed with homothetic recursive preferences. Agents with more incorrect beliefs dominate, or agents with different accuracy of their beliefs coexist in the long run, for broad ranges of plausible parameterizations when risk aversion is greater than the inverse of the intertemporal elasticity of substitution. The results highlight a crucial interaction between risk sharing, speculative behavior and consumption-saving choice of agents with heterogeneous beliefs, and the role of equilibrium prices in shaping long-run outcomes.",
author = "Jaroslav Borovi{\v c}ka",
note = "Funding Information: I am indebted to Lars Peter Hansen for his advice and continuous support. I appreciate helpful comments from Fernando Alvarez, David Backus, Gadi Barlevy, Anmol Bhandari, Kaia Borovi{\v c}ka, Katar{\'i}na Borovi{\v c}kov{\'a}, Hui Chen, Sebastian di Tella, Valentin Haddad, Narayana Kocherlakota, Virgiliu Midrigan, Alan Moreira, Stavros Panageas, Christopher Phelan, Thomas Sargent, Jos{\'e} Scheinkman, Harald Uhlig, Yuichiro Waki, Mark Westerfield, the participants of the Economic Dynamics Working Group at the University of Chicago, and the anonymous referees. All typos and errors are mine. Publisher Copyright: {\textcopyright} 2019 by The University of Chicago.",
year = "2020",
month = jan,
day = "1",
doi = "10.1086/704072",
language = "English (US)",
volume = "128",
pages = "206--251",
journal = "Journal of Political Economy",
issn = "0022-3808",
publisher = "University of Chicago",
number = "1",
}