Face-to-face communication drastically increases cooperation rates in social dilemmas. We test which factors are the most important drivers of this communication gap. We distinguish three main categories. First, communication may decrease social distance. Second, communication may enable...

We develop a framework for measuring biases in expectation formation. The basic insight is that under- and overreaction to new information is identified by the impulse response function of forecast errors. This insight leads to a simple and widely applicable measurement procedure. The procedure...

Expectations affect economic decisions, and inaccurate expectations are costly. Expectations can be wrong due to either bias (systematic mistakes) or noise (unsystematic mistakes). We develop a framework for quantifying the level of noise in survey expectations. The method is based on the...

We develop a general framework for measuring biases in expectation formation. The method is based on the insight that biases can be inferred from the response of forecast errors to past news. Empirically, biases are measured by flexibly estimating the impulse response function of forecast...