Project description
Explaining how memory shapes the formation of economic expectations
Economic beliefs and expectations have been shown to play a key role in economics, both for individual behaviour, such as managerial activity, as well as aggregate phenomena such as financial crises. The EU-funded MEMEB project seeks to explain how the way human memory works can affect these beliefs and expectations. The project's work will help explain how memory plays a key role in forming and maintaining economic biases and misperceptions that can affect major economic trends in the EU and the world.
Objective
Beliefs and expectations play a major role in economic analysis. In the proposed research, I seek to advance our empirical understanding of belief and expectation formation processes by incorporating memory patterns. Intuitively, memory plays a crucial role in the process of belief formation and the evolution of belief distortions, as large parts of the information used when forming beliefs is retrieved from memory. While recent theoretical work has begun to recognize the important role of memory for belief formation, empirical research is virtually non-existent. Accordingly, this research sets out to study the role of memory for belief formation in a set of key domains of behavioral economics. In parts 1a and 1b, I propose to study the role of associative recall in expectation formation. The principle of associative recall posits that current cues trigger the recall of past news that are mentally associated with the cue. Two central predictions that emerge from this principle are: (i) context-cued associative recall can lead to overreaction; (ii) context-cued associative recall can create belief spillovers. I plan to test both predictions in tailored lab experiments. In part 2a, I seek to study the implications of memory for reference-dependent behavior. Reference-dependent preferences are at the heart of many behavioral theories. Yet, the nature and determinants of reference points remains an open issue. I plan to experimentally study how memory shapes reference points. Memory patterns can endogenize the reference point and will deliver precise conditions as to when reference points can be expected to be determined by rational expectations, and when they are more likely to be backward-looking. In the final part of this proposal, I plan to study a key puzzle in behavioral economics. Why are so many people naïve about their present bias? In this project, I propose to experimentally study the role (imperfect) memory plays in generating and maintaining naïveté.
Fields of science (EuroSciVoc)
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: The European Science Vocabulary.
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: The European Science Vocabulary.
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Keywords
Project’s keywords as indicated by the project coordinator. Not to be confused with the EuroSciVoc taxonomy (Fields of science)
Project’s keywords as indicated by the project coordinator. Not to be confused with the EuroSciVoc taxonomy (Fields of science)
Programme(s)
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
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H2020-EU.1.1. - EXCELLENT SCIENCE - European Research Council (ERC)
MAIN PROGRAMME
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Topic(s)
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Funding Scheme
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
ERC-STG - Starting Grant
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Call for proposal
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
(opens in new window) ERC-2020-STG
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Net EU financial contribution. The sum of money that the participant receives, deducted by the EU contribution to its linked third party. It considers the distribution of the EU financial contribution between direct beneficiaries of the project and other types of participants, like third-party participants.
53113 Bonn
Germany
The organization defined itself as SME (small and medium-sized enterprise) at the time the Grant Agreement was signed.
The total costs incurred by this organisation to participate in the project, including direct and indirect costs. This amount is a subset of the overall project budget.