Work

Inflation expectations and cognitive uncertainty

Year: 2026

Type: article

Abstract: This paper provides a new perspective on the formation of inflation expectations based on a sample of 1036 US residents. In our information provision experiment, the participants were provided with professional forecasts of different historical accuracy and complexity. Our novel experimental design allows us to assess the influence of cognitive uncertainty while controlling for the uncertainty associated with forecasts and priors. Consistent with cognitive uncertainty we find that more complex forecasts lead to smaller updates of inflation expectation.

Source: Journal of Economic Behavior & Organization

DOI: 10.1016/j.jebo.2026.107437

Authors: Joscha Beckmann, Jennifer Brunne, Timo Heinrich

Institutions: FernUniversität in Hagen, Kiel Institute for the World Economy, SGH Warsaw School of Economics, Hamburg University of Technology

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,180

Funders: Durham University, Universität Innsbruck, Universität Rostock