TY - UNPD A1 - Massenot, Baptiste T1 - A business cycle model with neuroeconomic foundations T2 - SAFE working paper series ; No. 194 N2 - I present a new business cycle model in which decision making follows a simple mental process motivated by neuroeconomics. Decision makers first compute the value of two different options and then choose the option that offers the highest value, but with errors. The resulting model is highly tractable and intuitive. A demand function in level replaces the traditional Euler equation. As a result, even liquid consumers can have a large marginal propensity to consume. The interest rate affects consumption through the cost of borrowing and not through intertemporal substitution. I discuss the implications for stimulus policies. T3 - SAFE working paper - 194 Y1 - 2018 UR - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/45618 UR - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-456182 UR - https://ssrn.com/abstract=3116623 IS - January 31, 2018 PB - SAFE CY - Frankfurt am Main ER -