Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/49378 
Year of Publication: 
2011
Series/Report no.: 
Kiel Working Paper No. 1723
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
Abstract: 
This paper presents a simple experiment on how laypeople form macroeconomic expectations. Subjects have to forecast inflation and GDP growth. By varying the information provided in different treatments, we can assess the importance of historical time-series information versus information acquired outside the experimental setting such as knowledge of expert forecasts. It turns out that the availability of historical data has a dominant impact on expectations and wipes out the influence of outside-lab information completely. Consequently, backward-looking behavior can be identified unambiguously as a decisive factor in expectation formation.
Subjects: 
Expectations
macroeconomic experiment
use of information
inflation forecasts
JEL: 
D83
D84
E37
Document Type: 
Working Paper

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