How Do College Students Form Expectations?
2008 Number 378
Revised: October 2010
JEL classification: D8, I2, J1, J7
This paper focuses on how college students form expectations about various major-specific outcomes. For this purpose, I collect a panel data set of Northwestern University undergraduates that contains their subjective expectations about major-specific outcomes. Although students tend to be overconfident about their future academic performance, they revised their expectations in expected ways. The updating process is found to be consistent with a Bayesian learning model. I show that learning plays a role in the decision to switch majors, and that major-switchers respond to information from their own major. I also present evidence that learning is general and not entirely major-specific.
For a published version of this report, see Basit Zafar, "How Do College Students Form Expectations?" Journal of Labor Economics 29, no. 2 (April 2011): 301-48.