Description

Michael Woodford is the John Bates Clark Professor of  Political Economy at Columbia University. He received his A.B. from the University of Chicago, his J.D. from Yale Law School, and his Ph.D. in Economics from the Massachusetts Institute of Technology. He has been a MacArthur Fellow and a Guggenheim Fellow, and is a Fellow of the American Academy of Arts and Sciences, as well as a Fellow of the Econometric Society, of the Society for the Advancement of Economic Theory, and of the Society for Economic Measurement, a Research Associate of the National Bureau of Economic Research (Cambridge, Mass.), a Research Fellow of the Centre for Economic Policy Research (London), and a Fellow of the CESifo Research Network (Munich).  He was the 2007 recipient of the Deutsche Bank Prize in Financial Economics, the 2018 recipient of the Banque de France/TSE Prize in Monetary Economics, the 2024 recipient of the Erwin Plein Nemmers Prize in Economics, and in 2025 a co-recipient of the BBVA Foundations of Knowledge Award in Economics, Finance and Management (with Olivier Blanchard and Jordi Gali).

His most important work is the treatise Interest and Prices: Foundations of a Theory of Monetary Policy, recipient of the 2003 Association of American Publishers Award for Best Professional/Scholarly Book in Economics. He is also co-author or co-editor of several other volumes, including a three-volume Handbook of Macroeconomics (with John B. Taylor), a two-volume Handbook of Monetary Economics (with Benjamin M. Friedman), The Inflation Targeting Debate (with Ben S. Bernanke), and the textbook International Macroeconomics (with Stephanie Schmitt-Grohé and Martin Uribe).

Abstract:

Economic decisions observed in the laboratory fail to conform to normative principles in a variety of respects. Among others, they are not even consistent with fixed preferences from trial to trial; in this respect, choices (for example, between simple gambles) resemble perceptual judgments. In this talk, I explore the possibility that some notable departures from normative choice behavior result from choices being based on imprecise semantic representations of the numbers used to specify monetary payoffs. I review behavioral and neurobiological evidence regarding the “approximate number system,” and the implications for choices under risk of basing these decisions on imprecise number representations. In particular, I discuss recent evidence indicating that number representations are sensitive to the frequency with which numbers of different sizes occur in a given context, and show that the quantitative character of this context-dependence is predicted by a model of efficient coding of number information. I then show that choices with respect to gambles are similarly sensitive to the frequency with which monetary payoffs of different sizes are offered in a given experimental treatment, with consequences not only for the trial-to-trial consistency of choices, but for the average degree of departure from risk-neutrality.