Reprisals Remembered: German-Greek Conflict and Car Sales During the Euro Crisis

Limited attention and selective memory are key behavioral factors identified in the literature on cognitive biases and economic outcomes. We investigate how events trigger selective recall and thus change economic behavior. Following public disagreement between German and Greek politicians, Greek consumers drastically reduced their purchased of German automobiles - especially in areas affected by German reprisals during World War II. In reponse to contemporary political disagreements, Greeks living in areas where German troops committed massacres curtailed their purchases of German cars to a greater extent than those elsewhere. Current events can reactivate past memories, having a first-order effect on purchasing behavior.