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Behavioral Implications of Causal Misperceptions

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  • Ran Spiegler

Abstract

This review presents an approach to modeling decision making under misspecified subjective models. The approach is based on the idea that decision makers impose subjective causal interpretations on observed correlations, and it borrows basic concepts and tools from the statistics and artificial intelligence literatures on Bayesian networks. While these background literatures used Bayesian networks as a platform for normative and computational analysis of probabilistic and causal inference, in the framework proposed here graphical models represent causal misperceptions and help analyze their behavioral implications. I show how this approach sheds light on earlier equilibrium models with nonrational expectations and demonstrate its scope of economic applications.

Suggested Citation

  • Ran Spiegler, 2020. "Behavioral Implications of Causal Misperceptions," Annual Review of Economics, Annual Reviews, vol. 12(1), pages 81-106, August.
  • Handle: RePEc:anr:reveco:v:12:y:2020:p:81-106
    DOI: 10.1146/annurev-economics-072219-111921
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    Citations

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    Cited by:

    1. Kfir Eliaz & Ran Spiegler, 2024. "News Media as Suppliers of Narratives (and Information)," Papers 2403.09155, arXiv.org.
    2. Annekatrin Schrenker, 2023. "Causal Misperceptions of the Part-Time Pay Gap," Rationality and Competition Discussion Paper Series 372, CRC TRR 190 Rationality and Competition.
    3. Larry Samuelson & Jakub Steiner, 2024. "Constrained data-fitters," ECON - Working Papers 460, Department of Economics - University of Zurich.
    4. Annekatrin Schrenker, 2023. "Causal Misperceptions of the Part-Time Pay Gap," Discussion Papers of DIW Berlin 2031, DIW Berlin, German Institute for Economic Research.
    5. Alistair Macaulay & Wenting Song, 2022. "Narrative-Driven Fluctuations in Sentiment: Evidence Linking Traditional and Social Media," Economics Series Working Papers 973, University of Oxford, Department of Economics.
    6. Ran Spiegler, 2023. "Behavioral Causal Inference," Papers 2305.18916, arXiv.org.
    7. Andrew Ellis & Ran Spiegler, 2024. "Identifying Assumptions and Research Dynamics," Papers 2402.18713, arXiv.org, revised Jan 2025.
    8. Annekatrin Schrenker, 2023. "Causal Misperceptions of the Part-Time Pay Gap," Berlin School of Economics Discussion Papers 0010, Berlin School of Economics.
    9. Kai Barron & Heike Harmgart & Steffen Huck & Sebastian O. Schneider & Matthias Sutter, 2023. "Discrimination, Narratives, and Family History: An Experiment with Jordanian Host and Syrian Refugee Children," The Review of Economics and Statistics, MIT Press, vol. 105(4), pages 1008-1016, July.
    10. Philippe Jehiel & Konrad Mierendorff, 2021. "Auction Design with Data-Driven Misspecifications," Papers 2107.00640, arXiv.org.
    11. Spiegler, Ran, 2022. "On the behavioral consequences of reverse causality," European Economic Review, Elsevier, vol. 149(C).
    12. Peter Andre, 2022. "Shallow Meritocracy," CRC TR 224 Discussion Paper Series crctr224_2022_318v3, University of Bonn and University of Mannheim, Germany.
    13. Alistair Macaulay, 2022. "Heterogeneous Information, Subjective Model Beliefs, and the Time-Varying Transmission of Shocks," CESifo Working Paper Series 9733, CESifo.
    14. Peter Andre & Ingar Haaland & Christopher Roth & Mirko Wiederholt & Johannes Wohlfart, 2021. "Narratives about the Macroeconomy," ECONtribute Discussion Papers Series 127, University of Bonn and University of Cologne, Germany.
    15. Ambuehl, Sandro & Thysen, Heidi Christina, 2024. "Choosing Between Causal Interpretations: An Experimental Study," Discussion Paper Series in Economics 7/2024, Norwegian School of Economics, Department of Economics.
    16. Backhaus, Teresa & Schäper, Clara & Schrenker, Annekatrin, 2023. "Causal misperceptions of the part-time pay gap," Labour Economics, Elsevier, vol. 83(C).
    17. Pushkar Maitra & Ananta Neelim, 2024. "Discrimination in Developing Countries," Monash Economics Working Papers 2024-03, Monash University, Department of Economics.
    18. Matthes, Julian & Momsen, Katharina, 2024. "Preferences and Demand for Mental Models," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302412, Verein für Socialpolitik / German Economic Association.
    19. Fudenberg, Drew & Lanzani, Giacomo & Strack, Philipp, 2023. "Pathwise concentration bounds for Bayesian beliefs," Theoretical Economics, Econometric Society, vol. 18(4), November.
    20. Kai Barron & Tilman Fries, 2023. "Narrative Persuasion," Rationality and Competition Discussion Paper Series 469, CRC TRR 190 Rationality and Competition.
    21. Sandro Ambuehl & Heidi C. Thysen, 2024. "Choosing between causal interpretations: an experimental study," ECON - Working Papers 458, Department of Economics - University of Zurich.
    22. Philippe Jehiel, 2022. "Analogy-Based Expectation Equilibrium and Related Concepts:Theory, Applications, and Beyond," Working Papers halshs-03735680, HAL.

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