DP5851 Seemingly Irrelevant Events Affect Perceptions and Expectations - The FIFA World Cup 2006 as a Natural Experiment
|Author(s):||Thomas J Dohmen, Armin Falk, David Huffman, Uwe Sunde|
|Publication Date:||September 2006|
|Keyword(s):||expectation formation, macroeconomic outcomes, psychology, soccer World Cup, sunspots|
|JEL(s):||D0, D8, E0|
|Programme Areas:||International Macroeconomics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=5851|
Prominent economic theories have emphasized the role of commonly held perceptions and expectations for determining macroeconomic outcomes. A key empirical question is how such collectively held beliefs are formed. We use the FIFA World Cup 2006 as a natural experiment. We provide direct evidence that seemingly irrelevant events (the outcomes of soccer matches) can systematically affect individual perceptions about economic prospects, both on a personal and economy-wide level.