Associative Memory and Belief Formation

Benjamin Enke, Frederik Schwerter () and Florian Zimmermann

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: Information is often embedded in memorable contexts, which may cue the asymmetric recall of similar past news through associative memory. We design a theorydriven experiment, in which participants observe signals about hypothetical companies. Here, identical signal realizations are communicated with identical contexts: stories and images. Because participants asymmetrically remember those past signals that get cued by the current context, beliefs systematically overreact. This overreaction depends in predictable ways on the signal history; the correlation between signals and contexts; and the scope for forgetting and associative memory. We quantify these results by structurally estimating a model of associative recall.

Keywords: Beliefs; expectations; memory; bounded rationality (search for similar items in EconPapers)
JEL-codes: D01 (search for similar items in EconPapers)
Pages: 72
Date: 2020-01
New Economics Papers: this item is included in nep-upt
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Citations: View citations in EconPapers (35)

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https://www.crctr224.de/research/discussion-papers/archive/dp148

Related works:
Working Paper: Associative Memory and Belief Formation (2020)
Working Paper: Associative Memory and Belief Formation (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2020_148

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