Mental Models of Causal Structure in Economics and Psychology

Sandro Ambuehl, Rahul Bhui and Heidi C. Thysen

Papers from arXiv.org

Abstract: A burgeoning literature in economics studies how people form beliefs about the causal structures linking economic variables, and what happens when those beliefs are mistaken. We survey this research and connect it to a rich literature in cognitive science. After providing an accessible introduction to causal Directed Acyclic Graphs, the dominant modeling approach, we review theory and evidence addressing three nested questions: how individuals reason within a fully parameterized causal structure, how they estimate its parameters, and how they learn such structures to begin with. We then discuss methodological challenges and review applications in microeconomics, macroeconomics, political economy, and business.

Date: 2026-03, Revised 2026-04
New Economics Papers: this item is included in nep-cbe, nep-hpe and nep-neu
References: Add references at CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2603.29070 Latest version (application/pdf)

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:arx:papers:2603.29070

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().