Causal Narratives
We study causal narratives – narratives which describe a (potentially incorrect) causal relationship between variables. In a series of experiments across a range of data-generating processes, we show that exogenously generated causal narratives manipulate decisions in ways inconsistent with rational theory. Instead, decisions are generally consistent with a behavioral theory, but with important exceptions, including when subjects face multiple narratives with contradictory recommendations. To study the generation and transmission of causal narratives, we show that they arise endogenously when subjects observe a dataset and provide advice to future subjects. These homegrown causal narratives mislead both the sender and receiver.
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