Events

Sources of heterogeneity in subjective expectations are still not well understood. This paper is the first to look at systematic heterogeneity in subjective gasoline expectations. Using repeated cross-section data from the Michigan Survey of Consumers I find that subjective gasoline expectations are strongly affected by personal experiences. Respondents who experienced more volatile gasoline prices during their lifetime are shown to expect significantly larger changes in future gasoline prices. This pattern is robust to the inclusion of time and cohort fixed effects. In contrast, personal experiences seem not be related to car ownership.