Working Paper: CEPR ID: DP9704
Authors: Vasiliki Fouka; Hansjoachim Voth
Abstract: Limited attention and selective memory are important forms of cognitive bias. We investigate how present events trigger selective recall, thereby changing economic behavior. The 2010-14 sovereign debt crisis in Greece created massive political conflict between the German and Greek governments. During the same period, German car sales declined sharply. Effects differed according to the actions of German troops during the occupation of Greece, 1941-44. Declines in German market share were much larger in areas where the Germans carried out massacres. Current events can reactivate past memories selectively, even in the same country, having a large effect on purchasing behavior.
Keywords: Boycott; Car Sales; German-Greek Relations; Political Conflict; Sovereign Debt Crisis
JEL Codes: D12; D74; F14; N14; N44
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| historical atrocities committed by German troops in Greece (N94) | decline in German car sales during the Euro crisis (F44) |
| greater number and intensity of massacres in a Greek prefecture (N94) | larger decline in German market share of car sales (F69) |
| contemporary political conflict (D74) | reactivation of memories of past atrocities (E71) |
| reactivation of memories of past atrocities (E71) | behavioral response among consumers (D91) |
| areas with a history of political radicalization (P37) | larger declines in sales (L81) |