CEBI Phd course: Subjective Beliefs, Attention and Economic Behavior

PhD Course: Subjective Beliefs, Attention and Economic Behavior

Felix Chopra, Ingar Haaland, Chris Roth, Sonja Settele, Johannes Wohlfart
Center for Economic Behavior and Inequality (CEBI)
University of Copenhagen
March 15-17, 2023

Background: Beliefs play a central role in any economic model of decision-making under uncertainty and are key to understanding behavior in a wide range of domains. For example, beliefs about the returns to search should affect job search decisions; beliefs about the development of inflation may affect people’s wage bargaining; beliefs about returns on different assets are central to investment decisions; beliefs about inequality could matter for people’s political behavior, and so on.
The central role of beliefs in economic models raises two big empirical questions: first, how do people form their beliefs? The standard paradigm of “full information and rational expectations” has been broadly rejected by the empirical literature, which in turn sparked the
development of a variety of approaches in which limited information and non-rationality are central. The following questions are key in the quest for an alternative paradigm: What is the role of selective attention and information acquisition in belief formation? What is the role of people’s mental models of the world in shaping their beliefs and how are these models formed? How do simple stories and narratives affect people’s economic beliefs? What is the role of heuristics and cognitive biases in driving belief formation? How do experiences and memory shape people’s beliefs?

The second big empirical question is the following: how do beliefs affect economic decisions in practice? Specifically, is the elasticity of people’s behavior to their beliefs in line with benchmarks from standard models? To which beliefs do people pay attention when making
economic decisions? What are the frictions that limit the pass-through from beliefs to decisions, and how do these frictions vary across groups of economic agents and contexts?

Course topic: We offer a three-day course on the empirical study of belief formation and the role of beliefs in economic behavior. Our course has two key objectives. First, the course aims to introduce students to different topics central to a recent literature on belief formation and the role of beliefs in economic decisions. We will cover the following topics, amongst others:

● Subjective models of the macroeconomy and of asset markets
● Information frictions and information acquisition

First

● Narratives
● Experiences, memory and belief formation
● The role of the media in belief formation
● Beliefs and life choices
● Beliefs and policy views
● Beliefs and financial decisions

Second, the course aims to introduce students to state-of-the-art methods to study belief
formation, with a focus on experimental methods. Specifically, we will cover the following
issues:

● Eliciting beliefs in surveys
● Designing information treatments
● Mitigating demand and anchoring effects
● Hypothetical vignettes
● Measuring mental models
● Open-ended measurement of thoughts and attention

For each of these topics, the course will familiarize students with insights from recent research. A main goal of the course is to equip students with the necessary methodological tools and skills to conduct their own research projects in the field.
Course procedures: The course consists of five half-day teaching blocks, and an additional half-day for students to present their own work in progress in a poster session. There will also be a few slots for 15-minute student presentations, which we will allocate on a random basis among those who are interested in presenting their own work. There will also be various opportunities to socialize.
Prerequisites: The students should have knowledge of applied methods in economics. Basic knowledge of behavioral economics, political economics, macroeconomics or finance is an asset, but not a must. Participants will receive a short reading list upon admission to
prepare for the course in order to get the most out of it.

Instructors:
● Felix Chopra is Assistant Professor of Economics at the University of Copenhagen
and CEBI
● Ingar Haaland is Assistant Professor of Economics at NHH Bergen.
● Chris Roth is Professor of Economics at the University of Cologne
● Sonja Settele is Assistant Professor of Economics at the University of Copenhagen
and CEBI
● Johannes Wohlfart is Associate Professor of Economics at the University of
Copenhagen and CEBI

Admission procedure: Students who would like to participate in the course should send an email including their CV and a one-page statement on their motivation for applying to the course to cebiphdcourse2023@gmail.com no later than 12th January 2023. Applicants will be notified by 16th January 2023. Applicants should indicate in the application email whether they would be interested in presenting in one of the slots for 15-minute student presentations and/or whether they would be interested in being included in the poster
session. In case you have a preference for one format over the other, please let us know in the email as well.

Course fees: Participation in the course is free of charge. The participants need to arrange and fund accommodation and traveling themselves.
Location: University of Copenhagen, CSS Campus, Øster Farimagsgade 5, Building 35, room 35.3.20.

Overview of preliminary course schedule:

Wednesday, 15th March 2023
8.50-9.00 Welcome
9.00-10.30 Lecture 1 (Chris Roth): Designing information provision experiments
11-12.30 Lecture 2 (Johannes Wohlfart): Measuring mental models of the economy
12.30-14.00 Lunch
14.00-15.30 Lecture 3 (Sonja Settele): Beliefs and life choices
16.00-17.00 Lecture 4 (Felix Chopra): Home price expectations and spending
19.00 Dinner (free of charge)

Thursday, 16th March 2023
9.00-10.30 Lecture 5 (Ingar Haaland): Political narratives
11.00-12.30 Lecture 6 (Felix Chopra): Media, information demand, and beliefs
12.30-14.00 Lunch
14.00-15.30 Student presentations
16.00-17.00 Poster session
19.00 Get-together for drinks (participants pay themselves)

Friday, 17th March 2023
9.00-10.00 Lecture 7 (Sonja Settele): Beliefs and policy views
10.15-11.15 Lecture 8 (Johannes Wohlfart): Beliefs and stock investment behavior
11.30-12.30 Lecture 9 (Ingar Haaland): Beliefs about returns to active investing
12.30-14.00 Lunch
14:00-15:30 Lecture 10 (Chris Roth): Narratives and belief formation