The briq scholarship program supports about 25 Ph.D. students at the Bonn Graduate School of Economics. Some of them are directly involved in briq research activities. In a series of short portraits, the briq newsroom introduces our student fellows and what they do. One of them is Peter Andre, who has been at briq since October 2016.
What kind of topics are you working on?
My current research focuses mostly on beliefs and perception. Beliefs matter not only for decision-making under risk as traditional economics would claim. They can matter whenever behavior and reasoning depend on the environment – which is to say: virtually always. It’s usually our perception of the environment, our mental representations, that shape our thoughts and conduct. Now, in some cases, it may be reasonable to assume that our perceptions are correct and reflect what’s out there. However, we know already that this assumption will lead us astray in many important settings: educational or financial decisions, parenting, causal or political reasoning, and social or moral behavior.
Can you give an example?
In a project with Chris Roth, Johannes Wohlfart, and Carlo Pizzinelli, we study macroeconomic belief formation. We analyze how unemployment and inflation expectations react to hypothetical exogenous shocks such as changes in the oil price or federal funds rate. These beliefs are important because they can determine the trajectory of the economy and the effectiveness of policies. They can fuel booms and busts. So are they formed in line with standard macroeconomic models? It turns out that forecasts are often off the mark. This holds particularly for inflation forecasts and respondents with little knowledge and exposure to education.
What is a typical problem you are facing in your research?
In the context of beliefs, measurement is a huge challenge. You often face a trade-off between making the elicitation technique easy to understand for the respondent and theoretically sound.
You also spent two months in Papua New Guinea for field work. What brings an economist to that remote part of the world?
One of the traditional themes in behavioral economics: social behavior. I worked on a project with Andreas Pondorfer and Susann Adloff in the province of Bougainville. We elicited beliefs about what is socially appropriate behavior in different communities and investigated how this perception and the structure of the social network shape behavior and social-image effects.
While overseas, I also experienced personally how crucial perception is. The Bougainvilleans literally live in a different world. As an outsider, foreign to their fascinating culture and norms, I probably misunderstood many of their gestures and statements – and vice versa. On one day, two lunchs were prepared for me at different places – without me knowing about this. And the lunch that I arranged with my host was surprisingly cancelled. I still don’t fully understand what happened.