Narratives, alone or in constellation with one another, produce real-world effects. People use narratives to help them interpret events. As Kahnemann and Tversky outline in their model of the "representativeness heuristic," stories frame people's expectations and therefore inform how they will behave.
Robert Shiller describes how narratives inform individual economic actions, such as when and where to invest or whether to take a certain job. But, a story that is virulent enough can have mass-scale impacts. For instance, narratives in the latter half of the twentieth century that used efficiency to describe free markets helped contribute to a public reaction against regulation and government intervention in the economy.
