Counterfactual Thinking and Attribute Substitution in Economic Behavior

John Davis and Theodore Koutsobinas

Review of Behavioral Economics, 2021, vol. 8, issue 1, 1-23

Abstract: This paper discusses how counterfactual thinking can be incorporated into behavioral economics by relating it to a type of attribution substitution involved in choices people make in conditions of Knightian uncertainty. It draws on Byrne’s “rational imagination†account of counterfactual thinking, evidence from cognitive science regarding the forms it takes, and identifies types of attribution substitution specific to economic behavior. This approach, which elucidates the reflective stage of causal reasoning, is relevant for the explanation of hypothetical causal rules suitable for diverse tasks such as planning, expectations and mental simulations and for behavioural change interventions, which take into account people’s social and institutional embeddedness. The paper closes with a discussion of how this implies a specifically social Homo sapiens individual conception.

Keywords: Counterfactual thinking; attribute substitution; Knightian uncertainty; rational imagination; economic behavior; Homo sapiens (search for similar items in EconPapers)
JEL-codes: A12 A13 B41 D90 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:now:jnlrbe:105.00000131

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