Why Even with the Possibility of Real Wage Misperceptions Is

question 23

Essay

Why even with the possibility of real wage misperceptions is the market clearing model still neutral in the long run?

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Definitions:

Representativeness Heuristic

A cognitive shortcut used in decision making and judgments, where the likelihood of an object or event is assessed based on how closely it matches the typical case or stereotype.

Preexisting Beliefs

Ideas or convictions that an individual holds before being exposed to new information or experiences.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a person's mind when evaluating a specific topic, concept, method or decision.

Availability Heuristic

A cognitive shortcut based on quick examples that pop into one's mind while assessing a particular subject, idea, strategy, or choice.