Abstract News reports and communication are inherently constrained by space, time, and attention. As a result, news sources often condition the decision of whether to share a piece of information on the similarity between the signal and the prior belief of the audience, which generates a sample selection problem. This article experimentally studies how people form beliefs in these contexts, in particular the mechanisms behind errors in statistical reasoning. I document that a substantial fraction of experimental participants follows a simple “what you see is all there is” heuristic, according to which participants exclusively consider information that is right in front of them, and directly use the sample mean to estimate the population mean. A series of treatments aimed at identifying mechanisms suggests that for many participants, unobserved signals do not even come to mind. I provide causal evidence that the frequency of such incorrect mental models is a function of the computational complexity of the decision problem. These results point to the context dependence of what comes to mind and the resulting errors in belief updating.

Across the social sciences, a key question is how societies manage to enforce cooperative behavior in social dilemmas such as public goods provision or bilateral trade. According to an influential body of theories in psychology, anthropology, and evolutionary biology, the answer is that humans have evolved moral systems: packages of functional psychological and biological mechanisms that regulate economic behavior, including a belief in moralizing gods; moral values; negative reciprocity; and emotions of shame, guilt, and disgust. Based on a stylized model, this article empirically studies the structure and evolution of these moral traits as a function of historical heterogeneity in extended kinship relationships. The evidence shows that societies with a historically tightly knit kinship structure regulate behavior through communal moral values, revenge taking, emotions of external shame, and notions of purity and disgust. In loose kinship societies, on the other hand, cooperation appears to be enforced through universal moral values, internalized guilt, altruistic punishment, and an apparent rise and fall of moralizing religions. These patterns point to the presence of internally consistent but culturally variable functional moral systems. Consistent with the model, the relationship between kinship ties, economic development, and the structure of the mediating moral systems amplified over time.

This paper studies the supply of and demand for moral values in recent US presidential elections. Using a combination of large-scale survey data and text analyses, I find support for the hypothesis that both voters and politicians exhibit heterogeneity in their emphasis on universalist relative to communal moral values and that politicians’ vote shares partly reflect the extent to which their moral appeal matches the values of the electorate. Over the last decade, Americans’ values have become increasingly communal—especially in rural areas—which generated increased moral polarization and is associated with changes in voting patterns across space.

Abstract This article documents the economic relevance of measuring cognitive uncertainty: people’s subjective uncertainty over their ex ante utility-maximizing decision. In a series of experiments on choice under risk, the formation of beliefs, and forecasts of economic variables, we show that cognitive uncertainty predicts various systematic biases in economic decisions. When people are cognitively uncertain—either endogenously or because the problem is designed to be complex—their decisions are heavily attenuated functions of objective probabilities, which gives rise to average behavior that is regressive to an intermediate option. This insight ties together a wide range of empirical regularities in behavioral economics that are typically viewed as distinct phenomena or even as reflecting preferences, including the probability weighting function in choice under risk; base rate insensitivity, conservatism, and sample size effects in belief updating; and predictable overoptimism and -pessimism in forecasts of economic variables. Our results offer a blueprint for how a simple measurement of cognitive uncertainty generates novel insights about what people find complex and how they respond to it.

Many information structures generate correlated rather than mutually independent signals, the news media being a prime example. This article provides experimental evidence that many people neglect the resulting double-counting problem in the updating process. In consequence, beliefs are too sensitive to the ubiquitous “telling and re-telling of stories” and exhibit excessive swings. We identify substantial and systematic heterogeneity in the presence of the bias and investigate the underlying mechanisms. The evidence points to the paramount importance of complexity in combination with people’s problems in identifying and thinking through the correlation. Even though most participants in principle have the computational skills that are necessary to develop rational beliefs, many approach the problem in a wrong way when the environment is moderately complex. Thus, experimentally nudging people’s focus towards the correlation and the underlying independent signals has large effects on beliefs.

Recent theories and narratives highlight the potential role of associative recall in driving overreaction in expectations and market behavior. Based on a simple model, we test this idea through a series of experiments in which news are communicated with memorable contexts. Because the experimental participants predominantly remember those past news that get cued by new information, their beliefs about fundamentals strongly overreact. In a betting market experiment, associative recall translates into overreaction in market prices, which makes realized prices too extreme. Our results highlight the importance of associative memory for beliefs and financial decisions.

Abstract Throughout the Western world, people’s policy views are correlated across domains in a strikingly similar fashion. This article proposes that what partly explains the structure of ideology is moral universalism: the extent to which people exhibit the same level of altruism and trust towards strangers as towards in-group members. In new large-scale multinational surveys, heterogeneity in universalism descriptively explains why some people support redistribution, health care, environmental protection, affirmative action, and foreign aid, while others advocate for spending on the military, law enforcement, and border protection. Universalism is a substantially stronger predictor of policy views and ideological constraints than variables such as income, wealth, education, religiosity, or beliefs about government efficiency. Consistent with the idea that universalism shapes policy views, we further document that the left–right divide on redistribution, environmental protection, or foreign aid strongly attenuates or even reverses when people evaluate less universalist implementations of these policies.

The influence of behavioral biases on aggregate outcomes depends in part on self-selection: whether rational people opt more strongly into aggregate interactions than biased individuals. In betting market, auction and committee experiments, we document that some errors are strongly reduced through self-selection, while others are not affected at all or even amplified. A large part of this variation is explained by differences in the relationship between confidence and performance. In some tasks, they are positively correlated, such that self-selection attenuates errors. In other tasks, rational and biased people are equally confident, such that self-selection has no effects on aggregate quantities. (JEL C91, D44, D91)

This paper leverages nationally representative surveys across 60 countries and 64,000 respondents to present novel stylized facts about the relationship-specific nature of altruism. Across individuals, universalist preferences systematically vary with demographics such as age and religiosity and are predictive of many left-wing political views, albeit in culturally highly heterogeneous ways. Across countries, universalism is strongly linked to a broader radius of trust. Looking at origins, universalism varies with the economic, political, and religious organization of societies in ways that are consistent with the idea that the scope of altruism is partly shaped by economic incentives and democracy. (JEL D12, D64, D72, Z12, Z13)

Abstract This article studies the relationship between patience and comparative development through a combination of reduced-form analyses and model estimations. Based on a globally representative dataset on time preference in 76 countries, we document two sets of stylized facts. First, patience is strongly correlated with per capita income and the accumulation of physical capital, human capital, and productivity. These correlations hold across countries, sub-national regions, and individuals. Second, the magnitude of the patience elasticity strongly increases in the level of aggregation. To provide an interpretive lens for these patterns, we analyse an overlapping generations model in which savings and education decisions are endogenous to patience, aggregate production is characterized by capital-skill complementarities, and productivity implicitly depends on patience through a human capital externality. In our model estimations, general equilibrium effects alone account for a non-trivial share of the observed amplification effects, and an extension to human capital externalities can quantitatively match the empirical evidence.