To make sense of the world around us, we draw inference from data. Can one individual influence how another interprets data by proposing alternative explanations? I address this question in my job market paper (joint w/ @kaibarron). Thread⬇️, paper: https://t.co/h9lg7FxQZX

🚀 I am on the #EconJobMarket! 📜 In my JMP, I study how choosing a product shapes beliefs about product qualities, using a novel experimental design. 🌐 To read about this project or my work on Choice-induced Sticky Learning and more, visit: https://t.co/1BfbIDmLVz

One last DP for this week - this time from @tilmanfries who reproduced and extended @lu_butera, @RDMetcalfe, Morrison, and @DTaubinsky (2022) "The Welfare Effects of Pride and Shame". DP here:

📈Was bringt Anleger*innen dazu, einer Beratung zu vertrauen und zu investieren? In den WZB-Mitteilungen haben @tilmanfries & @kai_barron die Kommunikation zwischen Finanzberater*innen und Anleger*innen experimentell untersucht. #EconTwitter ⬇️ https://t.co/awSbsVnDQQ

- Kendall and Charles on causal narratives:

- @ptr_andre, @Ingar30, @cp_roth, and @JoWohlfart on narratives about the macroeconomy:

Finally, if you are now curious about the role of narratives in economics, there is important concurrent work that you might want to take a look at. For example: - @chiaraina on tailored stories:

You can find the paper on my website. Again, I am on the job market this year, so please reach out with questions, comments, and to get in touch. https://t.co/X3yr1sqkfD

The paper contains many more results, additional treatments, and details. And also, there's more to come in the next version. I know that many of you are already waiting for structural estimates that quantify the amount of persuasion.

Now, if you've read until here and are wondering whether cheap talk communication can explain results, please check out the paper. We discuss cheap talk equilibria quite extensively but find that they have a hard time accounting for our findings.

These results are in line with key assumptions and predictions from Schwartzstein and Sunderam. Their paper is very cool and provided us with a language and framework to think about these things. Check it out below. https://t.co/QgITmXo4Jp

Investors are consequently most misled by advisors who make good use of data features to construct tailored narratives.

Are narratives persuasive? We find that they are, and, therefore, investors are misled by biased advisors. Additionally, investors are more likely to adopt narratives with a high empirical fit, i.e., those that are tailored to 🔨🔨🔨 data.

Empirically, we find that advisors send narratives that are self-interested and that are tailored to fit the data. See the blue line; ⬆️-advisors exaggerate current CEO quality but they downplay initial CEO quality. This is the consequence of a tailored narrative.

The advisor knows all of these details. But their incentives might not be aligned. Imagine you're an advisor who wants the investor to think that the company is currently very good. Wouldn't it be tempting to attribute the successes between year 4 and 6 to the current CEO?

Here's what the data looks like. Investors have to estimate the company's future success rate. They need to know: 1️⃣ how good was the initial CEO? 2️⃣ how good is the current CEO? 3️⃣ when did the CEO change?

We conduct a financial advice experiment where investors have to assess a company and advisors provide a narrative to explain the company's past performance data.

But see also @ben_golub 's response with new data and a new interpretation! What's important here is that, depending on which narrative you believe in, you will form different beliefs about the consequences of twitter's policy change.

We combine data and narratives all the time to make points in discussions. Consider this tweet by @rafaelshimunov in the early days of twitter's new 🟦✔ verification.

Reading early game theory papers for this piece was a welcome distraction from the grim news of the past months. There were a few curious findings that didn't make it into the article. E.g., on Soviet perspectives on game theory