Imagining the Future: Memory, Simulation and Beliefs about COVID

By: Pedro Bordalo, Giovanni Burro, Katherine B. Coffman, Nicola Gennaioli and Andrei Shleifer

Format:Print
| Language:English
| Pages:74

Abstract

How do people form beliefs about novel risks, with which they have little or no experience? A 2020 U.S. survey of beliefs about the lethality of COVID reveals that the elderly underestimate, and the young overestimate, their own risks, and that people with more health adversities are more pessimistic, even for others. A model in which people selectively recall frequent and similar past experiences, including from other domains, and use them to imagine (simulate) the novel risk, explains our findings. An experience increases perceived risk if it makes that risk easier to imagine, but decreases it by interfering with recall of experiences that fuel imagination. The model yields new predictions on how non-COVID experiences shape beliefs about COVID, for which we find empirical support. These findings cannot be explained by conventional experience effects, and highlight memory mechanisms shaping which experiences are recalled and how they are used to form beliefs.

Keywords

Expectations; Memory; COVID-19 Pandemic; Perception; Behavior; Decision Choices and Conditions; Values and Beliefs

Citation

Bordalo, Pedro, Giovanni Burro, Katherine B. Coffman, Nicola Gennaioli, and Andrei Shleifer. "Imagining the Future: Memory, Simulation and Beliefs about COVID." NBER Working Paper Series, No. 30353, August 2022.