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Failures of Contingent Thinking

Author

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  • Evan Piermont
  • Peio Zuazo-Garin

Abstract

We present a behavioral definition of an agent's perceived implication that uniquely identifies a subjective state-space representing her view of a decision problem, and which may differ from the modeler's. By examining belief updating within this model, we formalize the recent empirical consensus that reducing uncertainty improves contingent thinking, and propose a novel form of updating corresponding to the agent 'realizing' a flaw in her own thinking. Finally, we clarify the sense in which contingent thinking makes state-bystate dominance more cognitively demanding than obvious dominance.

Suggested Citation

  • Evan Piermont & Peio Zuazo-Garin, 2020. "Failures of Contingent Thinking," Papers 2007.07703, arXiv.org, revised Jan 2026.
    • Handle: RePEc:arx:papers:2007.07703
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    References listed on IDEAS

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    6. Alejandro Martínez-Marquina & Muriel Niederle & Emanuel Vespa, 2019. "Failures in Contingent Reasoning: The Role of Uncertainty," American Economic Review, American Economic Association, vol. 109(10), pages 3437-3474, October.
    7. Kochov, Asen, 2018. "A behavioral definition of unforeseen contingencies," Journal of Economic Theory, Elsevier, vol. 175(C), pages 265-290.
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    Cited by:

    1. Evan Piermont, 2021. "Hypothetical Expected Utility," Papers 2106.15979, arXiv.org, revised Jul 2021.
    2. Piermont, Evan, 2021. "Unforeseen evidence," Journal of Economic Theory, Elsevier, vol. 193(C).

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