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A Cognitive Theory of Reasoning and Choice

Author

Listed:
  • Bordalo, Pedro
  • Gennaioli, Nicola
  • Lanzani, Giacomo
  • Shleifer, Andrei

Abstract

We present a theory of choice in which attention to the features of options is determined by the decision maker’s categorization of the current problem in a set of problems she solved in the past. Categorization depends on goal-relevant and contextual problem-level features. The model yields heterogeneity in attention and choice in a given problem based on different past experiences and instability when changes in irrelevant context cause recategorization. We show that heterogeneous and unstable representations of a choice problem unify major biases in judgment and decision making.

Suggested Citation

  • Bordalo, Pedro & Gennaioli, Nicola & Lanzani, Giacomo & Shleifer, Andrei, 2026. "A Cognitive Theory of Reasoning and Choice," Department of Economics, Working Paper Series qt2hc7c06v, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    • Handle: RePEc:cdl:econwp:qt2hc7c06v
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    Cited by:

    1. is not listed on IDEAS
    2. Nicola Gennaioli & Frederik Schwerter & Guido Tabellini, 2026. "“Us vs Them”: Salient Conflict and Belief Polarization," CESifo Working Paper Series 12547, CESifo.
    3. Thomas Graeber & Shakked Noy & Christopher Roth & Thomas W. Graeber, 2025. "The Transmission of Reliable and Unreliable Information," CESifo Working Paper Series 12109, CESifo.
    4. Robin Musolff & Florian Zimmermann, 2025. "Model Uncertainty," ECONtribute Discussion Papers Series 369, University of Bonn and University of Cologne, Germany.
    5. Thomas Graeber & Christopher Roth & Marco Sammon & Thomas W. Graeber, 2025. "Coarse Categories in a Complex World," CESifo Working Paper Series 12032, CESifo.
    6. Joshua Dean & Gabriel Kreindler & Oluchi Mbonu, 2026. "The Effect of Exposure: Evidence from Spatial Choices in Nairobi," Working Papers 2026-24, Becker Friedman Institute for Research In Economics.
    7. Nicola Gennaioli & Matthias Rodemeier & Gregory Sun, 2026. "Nonlinear Pricing and Revealed Salience," CESifo Working Paper Series 12769, CESifo.

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    Keywords

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    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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