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Seemingly Irrelevant Events Affect Perceptions and Expectations - The FIFA World Cup 2006 as a Natural Experiment

Author

Listed:
  • Dohmen, Thomas J
  • Falk, Armin
  • Huffman, David
  • Sunde, Uwe

Abstract

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.

Suggested Citation

  • Dohmen, Thomas J & Falk, Armin & Huffman, David & Sunde, Uwe, 2006. "Seemingly Irrelevant Events Affect Perceptions and Expectations - The FIFA World Cup 2006 as a Natural Experiment," CEPR Discussion Papers 5851, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:5851
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    References listed on IDEAS

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    1. Matsusaka, John G & Sbordone, Argia M, 1995. "Consumer Confidence and Economic Fluctuations," Economic Inquiry, Western Economic Association International, vol. 33(2), pages 296-318, April.
    2. Morris, Stephen & Shin, Hyun Song, 1998. "Unique Equilibrium in a Model of Self-Fulfilling Currency Attacks," American Economic Review, American Economic Association, vol. 88(3), pages 587-597, June.
    3. Russell Cooper & Andrew John, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, Oxford University Press, vol. 103(3), pages 441-463.
    4. Woodford, Michael, 1990. "Learning to Believe in Sunspots," Econometrica, Econometric Society, vol. 58(2), pages 277-307, March.
    5. Cass, David & Shell, Karl, 1983. "Do Sunspots Matter?," Journal of Political Economy, University of Chicago Press, vol. 91(2), pages 193-227, April.
    6. Acemoglu, Daron & Scott, Andrew, 1994. "Consumer Confidence and Rational Expectations: Are Agents' Beliefs Consistent with the Theory?," Economic Journal, Royal Economic Society, vol. 104(422), pages 1-19, January.
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    Citations

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    Cited by:

    1. Dietmar Fehr & Frank Heinemann & Aniol Llorente-Saguer, 2011. "The Power of Sunspots: An Experimental Analysis," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2011_33, Max Planck Institute for Research on Collective Goods.
    2. repec:ove:journl:aid:11247 is not listed on IDEAS
    3. Simon Planells Struse & Daniel Montolio, 2014. "The effect of football matches on crime patterns in Barcelona," ERSA conference papers ersa14p1606, European Regional Science Association.
    4. Adrian R. Bell & Chris Brooks & David Matthews & Charles Sutcliffe, 2012. "Over the moon or sick as a parrot? The effects of football results on a club's share price," Applied Economics, Taylor & Francis Journals, vol. 44(26), pages 3435-3452, September.
    5. Daniel Montolio & Simón Planells-Struse, 2015. "Measuring the negative externalities of a private leisure activity: hooligans and pickpockets around the stadium," Working Papers 2015/15, Institut d'Economia de Barcelona (IEB).
    6. Doerrenberg, Philipp & Siegloch, Sebastian, 2014. "Is soccer good for you? The motivational impact of big sporting events on the unemployed," Economics Letters, Elsevier, vol. 123(1), pages 66-69.
    7. Stan du Plessis & Wolfgang Maennig, 2007. "World Cup 2010: South African Economic Perspectives and Perspectives Policy Challenges Informed by the Experience of Germany 2006," Working Papers 004, Chair for Economic Policy, University of Hamburg.

    More about this item

    Keywords

    expectation formation; macroeconomic outcomes; psychology; soccer World Cup; sunspots;

    JEL classification:

    • D0 - Microeconomics - - General
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • E0 - Macroeconomics and Monetary Economics - - General

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