Cognitive Limitations: Failures of Contingent Thinking

Muriel Niederle () and Emanuel Vespa ()
Additional contact information
Muriel Niederle: Department of Economics, Stanford University, Stanford, California, USA
Emanuel Vespa: Department of Economics, University of California, San Diego, California, USA

Annual Review of Economics, 2023, vol. 15, issue 1, 307-328

Abstract: In recent years, experiments have documented a new mechanism that leads to failures of profit maximization: the failure of contingent thinking (FCT). This article summarizes key experimental findings, clarifies what constitutes an FCT, and outlines how FCTs can be tested in other environments. Subsequently, we relate FCTs to recent theoretical work on cognitive limitations in behavioral economics. Finally, we connect FCTs to suboptimal behavior documented in applied environments.

Keywords: behavioral theory; experiments; cognitive economics; cognitive limitations; sure-thing principle (search for similar items in EconPapers)
JEL-codes: C72 C91 D80 D91 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.1146/annurev-economics-091622-124733
Full text downloads are only available to subscribers. Visit the abstract page for more information.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:anr:reveco:v:15:y:2023:p:307-328

Ordering information: This journal article can be ordered from
http://www.annualreviews.org/action/ecommerce

DOI: 10.1146/annurev-economics-091622-124733

Access Statistics for this article

More articles in Annual Review of Economics from Annual Reviews Annual Reviews 4139 El Camino Way Palo Alto, CA 94306, USA.
Bibliographic data for series maintained by http://www.annualreviews.org ().