The Memory Premium

Yuval Salant, Jörg Spenkuch and David Almog

No 33649, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We explore the role of memory for choice behavior in unfamiliar environments. Using a unique data set, we document that decision makers exhibit a "memory premium." They tend to choose in-memory alternatives over out-of-memory ones, even when the latter are objectively better. Consistent with well-established regularities regarding the inner workings of human memory, the memory premium is associative, subject to interference and repetition effects, and decays over time. Even as decision makers gain familiarity with the environment, the memory premium remains economically large. Our results imply that the ease with which past experiences come to mind plays an important role in shaping choice behavior.

JEL-codes: D01 D03 D87 D91 (search for similar items in EconPapers)
Date: 2025-04
Note: IO
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