How do college students form expectations?

Abstract: 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.

Keywords: college majors; expectations; learning;

JEL Classification: D8; I2; J1; J7;

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Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Staff Reports

Publication Date: 2010-10-01

Number: 378

Pages: 52 pages

Note: 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.