BEAT Economics Seminar - Tilam Fries (LMU Munich)

Tuesday, 03 November 2026 at 13:30

Narratives, Belief Movements, and Economic Fluctuations" (with Tony Q. Fan)

Event details

We study how the construction and transmission of narratives—interpretations that explain observed data—systematically distort belief formation. In a dynamic environment where signals are generated by an evolving state, we show that selecting and sharing well-fitting narratives makes beliefs more extreme and volatile. We test these predictions in a controlled experiment comparing beliefs formed with and without exposure to an endogenously constructed narrative. Participants exposed to narratives form substantially more extreme beliefs, overreact to recent data, and exhibit greater belief volatility over time. These results identify a mechanism through which narrative-based reasoning induces overreaction and excess volatility, with implications for aggregate belief dynamics given the central role of narratives in economic communication.

Organiser

University of Exeter Business School - Economics

Location

XFi Conference Room 2