Competing Causal Interpretations: An Experimental Study
with Sandro Ambühl
Hybrid event
Luxembourg Institute of Socio-Economic Research (LISER)
Maison des Sciences Humaines
11, Porte des Sciences
L-4366 Esch-sur-Alzette / Belval
Salle Conférence (1st floor, Maison des Sciences Humaines))
10:30 am
11:45 am
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A central factor when choosing an action is its causal effect on the outcome of interest. Yet, causal information is often lacking. People instead observe correlational or historical data, along with causal interpretations and recommendations provided by experts who frequently disagree with each other. Our laboratory experiments study choice in such settings, where beliefs concern the structure of the data-generating process rather than merely magnitudes. Roughly half of our subjects attempt to determine the fit of the causal interpretations to past data, as the literature on model persuasion assumes. We characterize the limits to their ability to do so. Half the subjects’ choices are co-determined by the interpretations’ promises of future payouts, as the literature on narrative competition assumes, or by the downside these choices entail if they are mistaken. Subjects also commonly employ heuristics such as Occam’s razor. The fact that they typically prefer flexibility over parsimony insures them against bad choices in some settings but has the opposite effect in others. Our estimates predict well out of sample and closely agree across two different identification strategies in two different samples. We also study the extent to which behavior is robust to framing and the relation between subjects’ choices and their political attitudes and psychological characteristics. Our results characterize the cases in which subjects’ behavioral tendencies render them most receptive to misleading interpretations. They also inform the literatures on narrative competition and model persuasion.


Sandro Ambühl is the UBS Foundation Assistant Professor of Behavioral Economics of Financial Markets at the Department of Economics at the University of Zurich. One part of his research focuses on the question of how to help people make good financial decisions. His other strand of research concerns policies for the exchange of goods about which people have strong ethical intuitions, as is the case, for example, with living organ donation or medical trial participation. He seeks to address these questions using a combination of controlled experiments and economic theory. In 2022, he received a Starting Grant from the Swiss National Science Foundation to support his research on positive welfare economics. His research has been published in leading economics journals, including the American Economic Review, the Review of Economics and Statistics and Games and Economic Behavior. It has also been widely featured in the popular press, including the Washington Post, the Financial Times, the Wall Street Journal, NPR, Freakonomics Radio, and the Frankfurter Allgemeine Zeitung. 


More about the 3E DTU

The Doctoral Training Unit (DTU) 3E - Experiments, Ethics and Economics - consists of an interdisciplinary consortium of 9 social scientists who use scientific experiments involving human subjects in their research. The objective of the consortium is to create a formal link for collaboration across the three existing social science research laboratories in Luxembourg, with the aim to push forward the state-of-the-art of what we know about human behavior in economic interactions. The DTU 3E gathers members across 5 Luxembourgish research units:

(1) Luxembourg Institute of Socio-Economic Research LISER
(2) Institute for Health and Behavior IHB (Faculty of Humanities FLSHASE, University of Luxembourg UL)
(3) Institute of Cognitive Science and Assessment COSA (FLSHASE, UL)
(4) Luxembourg School of Finance LSF (Faculty of Law, Economics and Finance FDEF, UL)
(5) Luxembourg Centre of Logistics LCL (Economics Research Centre CREA, FDEF, UL)

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