Narratives, Belief Movements, and Economic Fluctuations

Last registered on March 26, 2025
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Pre-Trial

Trial Information

General Information

Title
Narratives, Belief Movements, and Economic Fluctuations
RCT ID
AEARCTR-0015607
Initial registration date
March 23, 2025

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
March 26, 2025, 9:44 AM EDT

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
Tilman Fries
Affiliation
LMU Munich
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Other Primary Investigator(s)

PI Name
Qiaofeng (Tony) Fan
PI Affiliation
University of Alabama
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Additional Trial Information

Status
In development
Start date
2025-03-24
End date
2025-12-31
Keywords
Behavior, Finance & Microfinance, Lab
Additional Keywords
Narratives, Belief Biases, Overreaction, Excess Volatility
JEL code(s)
C91, D83, D84, D91, G41
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We conduct a belief formation experiment with unobservable transitions in the latent state. Individuals observe a dataset of sequential signals, and the underlying state that generates these signals go through unobservable stochastic transitions (as in a "hidden Markov" environment). We test whether asking individuals to develop a narrative (a specific hypothesis of the state transition history) as an interpretation for each observed dataset can increase the extremeness and volatility of their beliefs by causing narrative developers to overweight best-fit narratives (interpretations). We also test whether the communication of developed narratives to others (the "narrative receivers") generates similar distortions in the beliefs of narrative receivers.
External Link(s)

Registration Citation

Citation
Fan, Qiaofeng (Tony) and Tilman Fries. 2025. "Narratives, Belief Movements, and Economic Fluctuations." AEA RCT Registry. March 26. https://doi.org/10.1257/rct.15607-1.0
Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2025-03-24
Intervention End Date
2025-04-30

Primary Outcomes

Primary Outcomes (end points)
Extremeness of stated belief about a hypothetical company's probability of success,
Volatility of stated belief about a hypothetical company's probability of success,
Extremeness of narrative-implied estimate of a hypothetical company's probability of success,
Volatility of narrative-implied estimate about a hypothetical company's probability of success.
Primary Outcomes (explanation)
See the attached pdf.

Secondary Outcomes

Secondary Outcomes (end points)
See the attached pdf.
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Participants take part in a belief updating task, where they see data on a hypothetical company and state their mean belief about the company's probability of success. In a Developer treatment, participants additionally provide a narrative before stating their mean belief. In a Receiver treatment, participants see data and a narrative when stating their mean belief.
Experimental Design Details
Not available
Randomization Method
Participants are randomized into treatment on the experimental session level. Further randomization of company data shown to participants is conducted in office by a computer.
Randomization Unit
Randomization into treatment on the experimental session level. Company data assignment is randomly conducted on the individual level. Assignment of participants to companies is balanced across treatments.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
240 participants
Sample size: planned number of observations
6000 (25 per participant)
Sample size (or number of clusters) by treatment arms
80 participants in Baseline, 80 participants in Developer, 80 participants in Receiver.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Institutional Review Board at the University of Alabama
IRB Approval Date
2025-03-20
IRB Approval Number
24-03-7429
Analysis Plan

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