Do People Have Economic Expectations?

Peter Andre, Felix Chopra, Luca Michels () and Johannes Wohlfart
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Luca Michels: University of Bonn

No 402, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: Expectations are central in economic models. But to what extent do individuals hold such expectations in the first place? We study whether — when thinking about an economic issue — individuals can build on previously-formed expectations. Many cannot: they must form expectations from scratch, even when close to making decisions for which the expectation should be relevant. This matters: individuals without previously-formed expectations (i) state more context-dependent expectations, (ii) update expectations more strongly but less persistently in response to new information, (iii) report expectations less relevant to decisions, and (iv) rely more on heuristics that do not require expectations when making decisions.

Keywords: Expectations; Belief Formation; Previously-Formed; Context-Dependence; Learning; Decision Relevance; Heuristics (search for similar items in EconPapers)
JEL-codes: C83 C91 D83 D84 D91 E71 G41 G53 (search for similar items in EconPapers)
Pages: 89 pages
Date: 2026-04
New Economics Papers: this item is included in nep-cbe and nep-exp
References: View references in EconPapers View complete reference list from CitEc
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https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_402_2026.pdf Second version, 2026 (application/pdf)

Related works:
Working Paper: Do People Have Economic Expectations? (2026)
Working Paper: Do People Have Economic Expectations? (2026)
Working Paper: Do people have economic expectations? (2026)
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Persistent link: https://EconPapers.repec.org/RePEc:ajk:ajkdps:402

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