How optimistic and pessimistic narratives about COVID-19 impact economic behavior

Arbeitspapier

Politicians, scientists and journalists have aired vastly different assessments of the COVID-19 pandemic, ranging from rather optimistic to very pessimistic ones. In this paper we investigate how narratives conveying different assessments of the pandemic impact economic behavior. In a controlled experiment with incentivized economic games we find that subjects behave more risk averse and less patiently when confronted with a pessimistic compared to an optimistic or balanced narrative. Further we find that narratives change subjects' expectations about the pandemic and the stock market. Hence our experiment provides causal evidence for an impact of narratives on fundamental determinants of household behavior.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECONtribute Discussion Paper ; No. 091

Classification and Topics

• Classification: Wirtschaft ; Information, Knowledge, and Uncertainty: General ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Macro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy‡ ; Behavioral Finance: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets‡
• Subject: Narrative Economics ; Risk Aversion ; Patience ; Expectations

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Harrs, Sören ; Müller, Lara Marie ; Rockenbach, Bettina
• Event: Veröffentlichung
• (who): University of Bonn and University of Cologne, Reinhard Selten Institute (RSI)
• (where): Bonn and Cologne
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/237336
• Last update: 10.03.2025, 11:41 AM CET