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What Comes to Mind

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  • Nicola Gennaioli
  • Andrei Shleifer

Abstract

We present a model of intuitive inference, called "local thinking," in which an agent combines data received from the external world with information retrieved from memory to evaluate a hypothesis. In this model, selected and limited recall of information follows a version of the representativeness heuristic. The model can account for some of the evidence on judgment biases, including conjunction and disjunction fallacies, but also for several anomalies related to demand for insurance.

Suggested Citation

  • Nicola Gennaioli & Andrei Shleifer, 2010. "What Comes to Mind," The Quarterly Journal of Economics, Oxford University Press, vol. 125(4), pages 1399-1433.
  • Handle: RePEc:oup:qjecon:v:125:y:2010:i:4:p:1399-1433.
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    File URL: http://hdl.handle.net/10.1162/qjec.2010.125.4.1399
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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