Signal Variance and Inflation Expectations

Last registered on October 31, 2022
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Pre-Trial

Trial Information

General Information

Title
Signal Variance and Inflation Expectations
RCT ID
AEARCTR-0010292
Initial registration date
October 24, 2022

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
October 31, 2022, 3:26 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
United States of America
Region

Primary Investigator

Name
Damjan Pfajfar
Affiliation
Federal Reserve Board
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Other Primary Investigator(s)

PI Name
Michael Lamla
PI Affiliation
Leuphana University
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PI Name
Kenneth Eva
PI Affiliation
Federal Reserve Board
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Additional Trial Information

Status
Completed
Start date
2022-10-05
End date
2022-10-31
Keywords
Behavior
Additional Keywords
Inflation Expectations
JEL code(s)
E31, E52, E58, D84
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We study how perceived forecast variance affects how consumers update their inflation expectations in a randomized control trial. We elicit participants' 12-month ahead inflation expectations and provide them with one of five different pieces of inflation news. We hypothesize that a consumer who receives a high-variance inflation signal updates their beliefs by less relative to a consumer who receives a low-variance signal. To explain this phenomenon, we develop a structural model where consumers update their inflation beliefs through a Kalman filtering process. These findings indicate that times of high uncertainty cause persistent expectations, which can in turn cause elevated inflation to persist.
External Link(s)

Registration Citation

Citation
Eva, Kenneth, Michael Lamla and Damjan Pfajfar. 2022. "Signal Variance and Inflation Expectations." AEA RCT Registry. October 31. https://doi.org/10.1257/rct.10292-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2022-10-05
Intervention End Date
2022-10-31

Primary Outcomes

Primary Outcomes (end points)
Short-run inflation expectations and expectation revisions.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The randomized control trial in the study will be conducted on US households. For our study, we focus on point estimates of expected inflation 12 months ahead. We elicit expectations before and after the information treatment.
Experimental Design Details
Randomization Method
Randomization done by external survey provider.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
None
Sample size: planned number of observations
2,500 respondents
Sample size (or number of clusters) by treatment arms
2,500 participants who were randomly selected into our five treatment arms, each consisting of 500 respondents.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials