Scandinavian Working Papers in Economics

Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics

No 7/2024: Choosing Between Causal Interpretations: An Experimental Study

Sandro Ambuehl () and Heidi Christina Thysen ()
Additional contact information
Sandro Ambuehl: Dept. of Economics, University of Zurich, Postal: University of Zurich, Department of Economics, UBS Center for Economics in Society, Rämistrasse 71 , 8006 Zürich, Switzerland
Heidi Christina Thysen: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway

Abstract: Good decision-making requires understanding the causal impact of our actions. Often, we only have access to correlational data that could stem from multiple causal mechanisms with divergent implications for choice. Our experiments comprehensively characterize choice when subjects face conflicting causal interpretations of such data. Behavior primarily reflects three types: following interpretations that make attractive promises, choosing cautiously, and assessing the fit of interpretations to the data. We characterize properties of interpretations that obscure bad fit to subjects. Preferences for more complex models are more common than those reflecting Occam’s razor. Implications extend to the Causal Narratives and Model Persuasion literatures.

Keywords: Decision-making; Causal mechanisms; Causal Narratives; Model Persuasion; Causal interpretations

JEL-codes: C91; D01; D83

Language: English

117 pages, April 30, 2024

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