Belief-based decisions are not only relevant for individual economic outcomes but may also have important effects on the economy as a whole. This is why belief formation is an important area of study for economists. briq has supported pioneering research on this topic, for example through workshops with leading international scholars (see the 2019 report and the program of the 2021 “Beliefs” workshop which took place in early May) and an ERC-supported project led by briq Research Director Florian Zimmermann.
In a video produced by Latest Thinking, Zimmermann explores the role that memory plays in belief formation. In particular, he studies associative recall, the way in which the recall of memory trace is triggered by cues that are mentally associated with that trace.
His experiment involves participants being provided with information (positive and negative) about hypothetical companies. After a time lapse, they are asked to assess the values of these companies. The research shows that respondents consistently overreact to the last piece of information that they receive. It also presents a new experimental paradigm for studying the role that associative recall and other memory imperfections play in the process of belief formation.