Disagreement on Inflation
Bryan Caplan points us to a paper by Mankiw, Reis, and Wolfers on disagreement about inflation:
The sticky-information model, according to which some people form expectations based on outdated information, seems capable of explaining many features of the observed evolution of both the central tendency and the dispersion of inflation expectations over the past fifty years.
This seems to me a good example of unproblematic disagreement. I must have expectations about inflation, but I never talk about them, and I don’t see how I could infer much about other people’s inflation expectations from their behavior. So if I disagree with others on inflation, I do not knowingly disagree. And it is only known disagreements that strongly suggest some sort of bias.
I am not sure why disagreements over inflation expectations should indicate bias, unless one is a true believer in rational expectations. But even with that, one can believe that the market as a whole exhibits ratex, even while there might be a distribution of individual expectations around that rational core.
For that matter, the ratex forecast can be wrong, indeed always wrong. So, who is biased? The person who makes the correct forecast or the person who makes the incorrect but rationally expected forecast?
I didn't mean to imply we had no idea what others expect about inflation. I meant that our uncertainty about the beliefs of others is probably about the same magnitude as the variance in beliefs across people.