Michael Weber, Bernardo Candia, Tiziano Ropele, Rodrigo Lluberas, Serafin Frache, Brent Meyer, Saten Kumar, Yuriy Gorodnichenko, Dimitris Georgarakos, Olivier Coibion, and Geoff Kenny
Working Paper 2023-8
July 2023

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Using randomized control trials (RCT) applied over time in different countries, we study how the economic environment affects how agents learn from new information. We show that as inflation has risen in developed economies, both households and firms have become more attentive and informed about inflation, leading them to respond less to exogenously provided information about inflation and monetary policy. This observation holds for both firms and households. We also study the effects of RCTs in countries where inflation has been consistently high (Uruguay) and low (New Zealand) as well as what happens when the same agents are repeatedly provided information in both low- and high-inflation environments (Italy). Our results broadly support models in which inattention is an endogenous outcome that depends on the economic environment.

JEL classification: E3, E4, E5

Key words: inattention, RCTs, inflation expectation


The authors thank the Fama-Miller Center and the Initiative on Global Markets, both at the University of Chicago Booth School of Business for financial support for conducting the surveys as well as the National Science Foundation (SES #1919307). They also thank Antar Diallo and Justus Meyer for research assistance and Shannon Hazlett at NielsenIQ for her assistance with the collection of the PanelViews Survey. The views expressed here are those of the authors and not necessarily those of the European Central Bank, the Bank of Italy, the Bank of Uruguay, or the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors' responsibility. Ordering of author names is randomized.

Please address questions regarding content to Michael Weber, the University of Chicago and the National Bureau of Economic Research (NBER); Bernardo Candia, the University of California, Berkeley; Tiziano Ropele, the Bank of Italy; Rodrigo Lluberas, Universidad ORT; Serafin Frache, Universidad de Montevideo; Brent Meyer, the Federal Reserve Bank of Atlanta; Saten Kumar, Auckland University of Technology; Yuriy Gorodnichenko, the University of California, Berkeley and NBER; Dimitris Georgarakos, European Central Bank; Olivier Coibion, University of Texas at Austin and NBER; Geoff Kenny, the European Central Bank; and Jorge Ponce, the Bank of Uruguay.

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