A Cognitive Theory of Reasoning and Choice

Pedro Bordalo, Nicola Gennaioli, Giacomo Lanzani and Andrei Shleifer

Department of Economics, Working Paper Series from Department of Economics, Institute for Business and Economic Research, UC Berkeley

Abstract: Abstract We present a theory of choice in which attention to the features of options is determined by the decision maker’s categorization of the current problem in a set of problems she solved in the past. Categorization depends on goal-relevant and contextual problem-level features. The model yields heterogeneity in attention and choice in a given problem based on different past experiences and instability when changes in irrelevant context cause recategorization. We show that heterogeneous and unstable representations of a choice problem unify major biases in judgment and decision making.

Keywords: 38 Economics (for-2020); 3801 Applied Economics (for-2020); 3802 Econometrics (for-2020); 3803 Economic Theory (for-2020); Behavioral and Social Science (rcdc); Mental Health (rcdc); 14 Economics (for); Economics (science-metrix); 3801 Applied economics (for-2020); 3802 Econometrics (for-2020); 3803 Economic theory (for-2020) (search for similar items in EconPapers)
Date: 2026-07-11
New Economics Papers: this item is included in nep-hpe and nep-neu
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