Imperfect Memory and Choice Under Risk

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Business Economics and Public Policy Papers
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memory
self deception
behavioral economics
Behavioral Economics
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Gottlieb, Daniel A
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This paper presents a model of choice based on imperfect memory and self-deception. I assume that people have preferences over their own attributes (e.g., skill, knowledge, or competence) and can manipulate their memories. The model provides a prior-dependent theory of regret aversion and allows for prior-dependent information attitudes. It implies that behavior will converge to the one predicted by expected utility theory after a choice has been faced a sufficiently large number of times.

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2014-05-01
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Games and Economic Behavior
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