Viral Narratives: The Role of Narratives for Economic Belief Formation

This proposal seeks to study economic narratives. Narratives may both shape expectation formation and influence economic decisions.

Using large-scale experiments, this proposal seeks to better understand the drivers of the virality of narratives as well as the mechanisms underlying their persuasive effects.

A key feature of this proposal is the combination of qualitative data on economic narratives, as measured in speech recordings, with quantitative data on beliefs and economic behaviors. In Part 1, I seek to study the production and transmission of narratives. In Part 1a, I plan to study which types of narratives about economic phenomena tend to get retold and thereby go viral.

The experiments will examine which features of narratives are predictive of their virality and how narratives mutate through the transmission process.

In Part 1b, I plan to study how incentives to entertain shape people’s narratives and how the resulting distortions affect downstream belief formation.

Part 2 aims to combine administrative data on high-stakes economic behaviors with economic narratives, as measured with speech recordings.

I aim to measure narratives about the labor market effects of Artificial intelligence in large representative samples as well as among journalists, politicians and labor market experts.

I then plan to relate narratives to important labor market behaviors and educational choices and to examine their origins. Finally, Part 3 proposes to study the mechanisms behind the persuasiveness of narratives.

Our experiments will allow us to cleanly identify how narratives affect belief updating and confidence compared to well-defined Bayesian benchmarks.

We plan to examine the mechanisms, with a particular focus on how narratives facilitate the process of mental simulation.

These projects trace the journey of economic narratives from their inception and spread to their impacts on behaviors and beliefs, and unveil the underlying cognitive and social mechanisms.