NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Mirko Wiederholt

Professor of Economics
Sciences Po, Paris
28 rue des Saints Peres
75007 Paris
France

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Sciences Po, Paris

NBER Working Papers and Publications

June 2018Expectations with Endogenous Information Acquisition: An Experimental Investigation
with Andreas Fuster, Ricardo Perez-Truglia, Basit Zafar: w24767
Information frictions play an important role in many theories of expectation formation. We use a survey experiment to generate direct evidence on how people select, acquire and process information. Participants can buy different information signals that could help them forecast future national home prices. We elicit their willingness to pay for information, and introduce exogenous variation in the cost of information. We find that participants put substantial value on their preferred signal and, when acquired, incorporate the signal in their beliefs. However, they disagree on which signal to buy. As a result, making information cheaper does not decrease the cross-sectional dispersion of expectations. We further document that numeracy and the revealed “taste” for accurate expectations are i...
 
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