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Belief updating among college students: evidence from experimental variation in information

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  • Matthew Wiswall
  • Basit Zafar

Abstract

We investigate how college students form and update their beliefs about future earnings using a unique “information” experiment. We provide college students true information about the population distribution of earnings and observe how this information causes respondents to update their beliefs about their own future earnings. We show that college students are substantially misinformed about population earnings and logically revise their self-beliefs in response to the information we provide, with larger revisions when the information is more specific and is good news. We classify the updating behaviors observed and find that the majority of students are non-Bayesian updaters.

Suggested Citation

  • Matthew Wiswall & Basit Zafar, 2011. "Belief updating among college students: evidence from experimental variation in information," Staff Reports 516, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednsr:516
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Sequeira, Sandra & Spinnewijn, Johannes & Xu, Guo, 2016. "Rewarding schooling success and perceived returns to education: evidence from India," LSE Research Online Documents on Economics 68279, London School of Economics and Political Science, LSE Library.
    2. Bradley, Elizabeth S., 2012. "The Effect of the Business Cycle on Freshman Major Choice," MPRA Paper 42412, University Library of Munich, Germany.
    3. Huntington-Klein, Nick, 2015. "Subjective and projected returns to education," Journal of Economic Behavior & Organization, Elsevier, vol. 117(C), pages 10-25.
    4. Tatyana Deryugina, 2013. "How do people update? The effects of local weather fluctuations on beliefs about global warming," Climatic Change, Springer, vol. 118(2), pages 397-416, May.
    5. Sequeira, Sandra & Spinnewijn, Johannes & Xu, Guo, 2016. "Rewarding schooling success and perceived returns to education: Evidence from India," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PA), pages 373-392.

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    Keywords

    Prediction (Psychology) ; Wages ; Universities and colleges ; Demography ; Uncertainty ; Bayesian statistical decision theory;

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