The preference panel contains a checkbox to turn auto completion on or off; by default it is off. When auto completion is on, typing certain characters inserts an entire string in the source file. For instance, typing ^ inserts ^{ }, with the cursor positioned inside the brackets.

Auto completion elements can be modified and created by editing the file "autocompletion.plist". The comments at the start of this file explain how to make changes. To do so, edit the file

  ~/Library/TeXShop/Keyboard/autocompletions.plist

with TeXShop. Be sure to edit and save in UTF-8 format if you use Unicode characters.
How do I configure TeXShop?
Modifying Auto Completion