?Just Forget It?: Memory Distortion as Bounded Rationality
AbstractDistortions in memory impose important bounds on rationality but have been largely disregarded in economics. While it is possible to learn, it is more difficult, and sometimes impossible, to unlearn. This retention effect lowers individual utility directly or via reduced productivity, and adds costs to principal-agent relationships. The imprinting effect states that the more one tries to forget a piece of information the more vivid it stays in memory, leading to a paradoxical outcome. The effects are based on, and are supported by, psychological experiments, and it is shown that they are relevant in many economic situations and beyond.
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Bibliographic InfoPaper provided by Center for Research in Economics, Management and the Arts (CREMA) in its series CREMA Working Paper Series with number 2005-01.
Date of creation: Jun 2004
Date of revision:
Memory; bounded rationality; learning; retention; ironic process theory; principalagency theory;
Other versions of this item:
- Bruno Frey, 2005. "‘‘Just forget it.’’ Memory distortions as bounded rationality," Mind and Society: Cognitive Studies in Economics and Social Sciences, Fondazione Rosselli, vol. 4(1), pages 13-25, 06.
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- J2 - Labor and Demographic Economics - - Demand and Supply of Labor
- M20 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - General
- Z00 - Other Special Topics - - General - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-06-05 (All new papers)
- NEP-CBE-2005-06-05 (Cognitive & Behavioural Economics)
- NEP-EXP-2005-06-05 (Experimental Economics)
- NEP-MIC-2005-06-05 (Microeconomics)
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- Bruno S. Frey & Simon Luechinger & Alois Stutzer, 2004.
"Calculating Tragedy: Assessing the Costs of Terrorism,"
CESifo Working Paper Series
1341, CESifo Group Munich.
- Bruno S. Frey & Simon Luechinger & Alois Stutzer, 2007. "Calculating Tragedy: Assessing The Costs Of Terrorism," Journal of Economic Surveys, Wiley Blackwell, vol. 21(1), pages 1-24, 02.
- Bruno S. Frey & Simon Luechinger & Alois Stutzer, 2004. "Calculating Tragedy: Assessing the Costs of Terrorism," CREMA Working Paper Series 2004-23, Center for Research in Economics, Management and the Arts (CREMA).
- Bruno S. Frey & Simon Luechinger & Alois Stutzer, . "Calculating Tragedy: Assessing the Costs of Terrorism," IEW - Working Papers 205, Institute for Empirical Research in Economics - University of Zurich.
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