Inflation Experience and the Anchoring of Expectations: a Comparison of Lab and Survey Experiments

Last registered on November 18, 2022
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Pre-Trial

Trial Information

General Information

Title
Inflation Experience and the Anchoring of Expectations: a Comparison of Lab and Survey Experiments
RCT ID
AEARCTR-0010417
Initial registration date
November 14, 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
November 18, 2022, 12:13 PM EST

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

Locations

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Primary Investigator

Name
Salle Isabelle
Affiliation
Bank of Canada and University of Amsterdam
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Other Primary Investigator(s)

PI Name
Yuryi Gorodnichenko
PI Affiliation
UC Berkeley and NBER, USA
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PI Name
Olivier Coibion
PI Affiliation
University of Texas at Austin and NBER, USA.
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Additional Trial Information

Status
In development
Start date
2022-11-21
End date
2023-04-30
Keywords
Behavior, Finance & Microfinance
Additional Keywords
behavioral macroeconomic, inflation expectations, experience, central bank communication
JEL code(s)
E7, E31, E58, C93, C91
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
This project investigates inflation expectations, in particular mean-reversion, trend-chasing patterns and anchoring at the target, in the wake of the rapidly rising inflation in 2022 in the Netherlands. The insights from two types of experiments are compared: a large-scale household survey and an individual decision-making laboratory environment. In both cases, the experimental design involves manipulating information provision about the central bank target and inducing distinct inflation experiences by enrolling participants in a forecasting game based on historical time series. There is a lot of evidence that experience in life shapes people's assessment of economic contexts and their ensuing economic and financial decisions. This project also aims to contrast experience in life versus experience in games and to what extent we can reproduce life experience of real-world cohorts with lab subjects.
External Link(s)

Registration Citation

Citation
Coibion, Olivier, Yuryi Gorodnichenko and Salle Isabelle. 2022. "Inflation Experience and the Anchoring of Expectations: a Comparison of Lab and Survey Experiments." AEA RCT Registry. November 18. https://doi.org/10.1257/rct.10417-1.0
Sponsors & Partners

Sponsors

Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2022-11-21
Intervention End Date
2023-04-30

Primary Outcomes

Primary Outcomes (end points)
Measurement of mean-reversion in inflation expectations via i) the credibility of the target at various horizons and ii) deviations of participants' expectations from the target at various horizons.
Primary Outcomes (explanation)
We seek to investigate three questions. First, to what extent do these two measurements of the target credibility depend on people’s previous experience with inflation? Second, does central bank’s emphasis on medium-term inflation target (as the ECB now does) favor mean-reversion in short-run inflation expectations and the anchorage of medium-to-long-run expectations? Third, to what extent do the answers to the first two questions differ in the lab and in the survey?

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The experiment has two parts, one in a survey and one in the lab. There are an experience and an information treatments.
Experimental Design Details
Not available
Randomization Method
Each respondent is randomly assigned to one of the experience and one of the information treatments upon starting the online survey with equal and independent probability.
In the lab, subjects are randomly assigned to one of the treatments with equal probability (two information provision treatments and three experience treatment).
Randomization Unit
individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
10,000 survey respondents and 300 lab subjects
Sample size: planned number of observations
10,000 survey respondents in the first wave, 5,000 expected in the second wave, and 250 lab subjects
Sample size (or number of clusters) by treatment arms
2500 respondents per life-experience treatment including control; 1500 respondents expected per information treatments including control; 50 to 60 subjects per experience-information treatment in the lab
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
2,500 observations per experience treatment, a group of 4,000 without any experience in the survey. A maximum of 60 subjects per treatment in the lab (a total of 360). To look into the effect of information, we pool together experience treatment (5,000 respondents, 180 subjects per information treatment). Examples of two computations are provided below for equivalence trials, with a 80% power and a 5% threshold: - In a continuous case, say with the short-run inflation point forecast, in percentage points, with an average of 4 in Tr. A vs. 4.5 in Tr. B, and a standard deviation close to 2, so effect size of 0.5/2= 0.25, we need about 250 respondents per treatment. - Dichotomous outcomes (e.g. judging likely or unlikely that inflation will go back close to target in two years): with an effect size of 5 p.p.between two independent groups, say from 20 to 25%, effect size: [(0.2*0.8+0.25*0.75)/sqrt(0.05^2)]*7.9 = 1100 per group.
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Economics & Business Ethics Committee (University of Amsterdam)
IRB Approval Date
2022-11-15
IRB Approval Number
EB-522
Analysis Plan