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

16 Pages Posted: 14 Dec 2006

See all articles by Thomas J. Dohmen

Thomas J. Dohmen

Institute for the Study of Labor (IZA); Maastricht University - Business Investment Research Center (BIRC)

Armin Falk

briq - Institute on Behavior & Inequality

David Huffman

IZA Institute of Labor Economics; Swarthmore College

Uwe Sunde

Ludwig Maximilian University of Munich (LMU)

Date Written: September 2006

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.

Keywords: Expectation formation, sunspots, soccer World Cup, macroeconomic outcomes, psychology

JEL Classification: D0, D8, E0

Suggested Citation

Dohmen, Thomas and Falk, Armin and Huffman, David and Sunde, Uwe, Seemingly Irrelevant Events Affect Perceptions and Expectations - the FIFA World Cup 2006 as a Natural Experiment (September 2006). CEPR Discussion Paper No. 5851. Available at SSRN: https://ssrn.com/abstract=951789

Thomas Dohmen (Contact Author)

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Maastricht University - Business Investment Research Center (BIRC) ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
+31-43-388 3832 (Phone)
+31-43-388 4856 (Fax)

Armin Falk

briq - Institute on Behavior & Inequality

Schaumburg-Lippe-Stra├če 5-9
Bonn, 53113
Germany

HOME PAGE: http://www.briq-institute.org/

David Huffman

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Swarthmore College

500 College Ave
Swarthmore, PA 19081
United States

Uwe Sunde

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

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