Heterogeneity of Expectations and Preferences and their Joint Impact on Individual Choices

Project summary

Intertemporal decisions on education, health, and finances depend on individuals’ preferences as well as on their subjective expectations. Beliefs and preferences are heterogeneous across individuals and frequently systematically biased, leading to suboptimal decisions. Using representative surveys and laboratory experiments, project A01 develops elicitation tasks that measure both beliefs and preferences such as risk aversion at the same time. An important application concerns patients’ and physicians’ beliefs about disease onset and the effects of health behaviors and interventions. The project also explores the interaction of beliefs and preferences in political attitudes, and the role of (biased) beliefs in image concerns and strategic ignorance.