Political polarization, expectations formation and central bank communication

Last registered on October 18, 2024
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Pre-Trial

Trial Information

General Information

Title
Political polarization, expectations formation and central bank communication
RCT ID
AEARCTR-0014566
Initial registration date
October 11, 2024

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 18, 2024, 4:50 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
Pei Kuang
Affiliation
Contact Primary Investigator

Other Primary Investigator(s)

PI Name
Michael Weber
PI Affiliation
PI Name
Shihan Xie
PI Affiliation

Additional Trial Information

Status
Completed
Start date
2024-04-21
End date
2024-05-02
Keywords
Behavior, Electoral
Additional Keywords
Expectation formation
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
This project examines how intergroup preferences among U.S. consumers with different political affiliations influence their macroeconomic expectations, using a large-scale online survey. We collect data on consumers' political affiliations and their perceptions of the U.S. Federal Reserve's political leaning. Our analysis focuses on the heterogeneity in expectation formation between consumers who view the Fed as either an outgroup or ingroup institution, including their behavior in acquiring and processing communications from the Fed.
External Link(s)

Registration Citation

Citation
Kuang, Pei, Michael Weber and Shihan Xie. 2024. "Political polarization, expectations formation and central bank communication." AEA RCT Registry. October 18. https://doi.org/10.1257/rct.14566-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention (Hidden)
Intervention Start Date
2024-04-21
Intervention End Date
2024-05-02

Primary Outcomes

Primary Outcomes (end points)
Inflation expectations
Willingness to pay for information from the Fed
Probability of receiving Fed communications
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Participants are asked about their political affiliation. Ingroup favoritism is measured by using an other-other allocation game where participants are invited to allocate a fixed sum of money to a group of one Democrat and one Republican. Additionally, we ask participants about their perception of the political leaning of the U.S. Federal Reserve, specifically whether they believe it leans toward the Democratic Party, Republican Party, no political party, or none of the above. A participant may view the Fed as an ingroup or outgroup institution depending on whether their own political views align with their perception of the Fed’s political stance.

Next, we assess participants' level of trust in the Fed, specifically regarding its ability to manage inflation and unemployment, as well as its concern for the economic well-being of all Americans. Additionally, we ask participants if they are credit-constrained and gather their perceptions and forecasts of inflation, unemployment, interest rates, and their perceived inflation target.

Information demand stage.

We randomly assign participants to two groups: a control group and a treatment group. Treatment group participants enter a game where they can pay to adjust the probability of receiving a news article from different sources. They can choose between two articles about the U.S. economy: one from a news agency (either left-leaning or right-leaning media) and the other from the Federal Reserve. We measure their willingness to pay for information from the Fed versus a left-leaning or right-leaning news source. By default, each article has a 50% chance of being selected. Each participant is given a $2 budget, which they can use to adjust the probability of receiving either article. It costs $1 to change the probability by 10 percentage points.

Information treatment stage

All participants are presented with the same piece of news article with identical wording on the projection of economic conditions. To isolate the effects of news sources on individual belief updating, we present the participants in the treatment group along with the logo of a news agency (either CNN or Fox News) or the Federal Reserve. No logo or source of information is displayed for control group participants.

The probability of receiving news from a specific source for each participant in the treatment group is determined by the choices made during the information demand stage.

Post-treatment stage.

After reading the provided information, participants are asked whether they have heard about the news before and to evaluate its political leaning and reliability. We then examine how participants update their expectations regarding inflation, unemployment, and interest rates after receiving this information.

Hypothetical scenario.

Respondents are asked to consider a hypothetical scenario where Democrats lose the presidency in the next US presidential election. Under this hypothetical scenario, we ask participants to provide their perceptions of political leaning and their trust in the Fed regarding its management of inflation and unemployment, as well as its concern for the economic well-being of all Americans.

Experimental Design Details
Randomization Method
Randomisation by a computer
Randomization Unit
individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
n/a
Sample size: planned number of observations
5205 adults
Sample size (or number of clusters) by treatment arms
4126 adults
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
University of Birmingham
IRB Approval Date
2024-03-04
IRB Approval Number
Details not available
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