We survey samples of German firms and households to document novel stylized facts about the extent of information frictions among the two groups. First, firms' expectations about macroeconomic variables are closer to expert forecasts and less dispersed than households', consistent with higher...

This paper investigates collective denial and willful blindness in groups, organizations and markets. Agents with anticipatory preferences, linked through an interaction structure, choose how to interpret and recall public signals about future prospects. Wishful thinking (denial of bad news) is...

We use novel survey data to estimate how personal experiences affect household expectations about aggregate economic outcomes in housing and labor markets. We exploit variation in locally experienced house prices to show that individuals systematically extrapolate from recent locally experienced...

Despite a robust college premium, college attendance rates in the US have remained stagnant and exhibit a substantial socioeconomic gradient. We focus on information gaps – specifically, incomplete information about college benefits and costs – as a potential explanation for these patterns....

Crime perception has increased in Peru in recent years, as in other developing and developed countries, in spite of the reduction in crime victimization figures. Our hypothesis is that the news industry is in part responsible for such developments. Using a novel database of written news, we...

Labor market programs may affect unemployed individuals' behavior before they enroll. Such ex ante effects may differ according to ethnic origin. We apply a novel method that relates self-reported perceived treatment rates and job search behavioral outcomes, such as the reservation wage or...

As evidence is accumulating that subjective expectations influence behavior and that these expectations are sometimes biased, it becomes policy-relevant to know how to influence individuals' expectations. Information in the media is likely to affect how people picture the future. This paper...

A growing body of evidence suggests that people exhibit large biases when processing information about themselves, but less is known about the underlying inference process. This paper studies belief updating patterns regarding academic ability in a large sample of students transitioning from...

This paper contributes to the literature on public health communication by studying how the framing of a message relaying the forecast impact of COVID-19 prevention measures affects compliance behaviour amongst both the young and old. A representative sample of survey respondents in the UK and...

Bayesian Updating is the dominant theory of learning in economics. The theory is silent about how individuals react to events that were previously unforeseeable or unforeseen. Recent theoretical literature has put forth axiomatic frameworks to analyze the unknown. In particular, we test if...