Cognitive Limitations: Failures of Contingent Thinking

Muriel Niederle and Emanuel Vespa

University of California at San Diego, Economics Working Paper Series from Department of Economics, UC San Diego

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: Economics; Applied Economics; Economic Theory; Behavioral and Social Science; Clinical Research; Basic Behavioral and Social Science; Applied economics; Economic theory (search for similar items in EconPapers)
Date: 2023-09-13
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp and nep-neu
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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