Investment Office

Abstract

Consumers, forced to navigate a constant stream of economic information, are often challenged to sort through details and respond to new material. Experiments suggest that people react more forcefully to negative income shocks than to positive ones. Size also matters: Reaction to small shocks is slower relative to the response to big shocks.

Text Excerpt:

"The laboratory provides insight into how cognitively taxing it can become for people exposed to changes in the economic landscape to acquire and process information."

Charts Excerpt: