Cognitive Anomalies and Experimental Economics

Howard Margolis

No 502, Working Papers from Harris School of Public Policy Studies, University of Chicago

Abstract: The paper develops an account of anomalous behavior in work at the intersection of cognition and experimental economics. The anomalies are choices which conflict with both agents' self-interest and also with any plausible other-regarding interests. I review three examples, and provide evidence for an account (the "cascade" account) in terms of cognitive illusions akin to those that appear to lie behind such extensively studied anomalies of individual choice as the Wason selection task and the Monty Hall problem. This has implications (1) for understanding cognitive anomalies generally (2) for experimenters (it is a commonplace to say that "framing matters", but treating framing as a choice by the experimenter, not as responses by subjects that might surprise the experimenter were she aware of them); (3) for the NSNX ("neither selfish nor exploited") account of individual choice to which I am partial, though I have tried to minimize attention to NSNX in this article; (4) for actual cooperation in the world, since if players in a game can misinterpret their context due to the impoverished cues in an experiment, then agents in the world may be vulnerable to similar misperceptions in situations beyond the scale of their experience, perhaps with tragic consequences.

Keywords: cognition; economics; cognitive anomalies; NSNX; game theory (search for similar items in EconPapers)
Date: 2005-03
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