Biased Beliefs in Dynamic Decisions in Competitive Markets

Project summary

Project A02 considers dynamic household decisions in labor markets and markets for household finance products. The central research question is to explore the implications of biased beliefs about the relevant market prices on household behavior and to investigate the consequences for public policy. A recurring theme in the project’s empirical strategies is to connect laboratory experiments with econometric analyses of survey evidence from the new SOEP subsample which contains detailed information about individual’s expectations. In this context, the project will develop new econometric tools to account for selective non-response and measurement error.