A Principal-Agent Model of Affect and Cognition: How to Explain Cognitive 'Biases and Fallacies' with a Unified Model

Posted: 24 Apr 2009

See all articles by Mihnea C. Moldoveanu

Mihnea C. Moldoveanu

University of Toronto - Joseph L. Rotman School of Management

Date Written: April 21, 2009

Abstract

A principal- agent model of affect (principal) and cognition (agent) is shown to explain cognitive 'biases' and 'fallacies' as well as inter-theoretic choices predicated on extra-evidential considerations (such as simplicity) within a single, consistent, maximization-based framework. The cognitive effects explained by the model include cognitive dissonance aversion, the disjunction fallacy, the confirmation bias and the preference for simplicity when making choices among scientific theories and models of particular evidence statements.

Keywords: economics of cognition, probabilistic reasoning, biases and fallacies

JEL Classification: D00

Suggested Citation

Moldoveanu, Mihnea C., A Principal-Agent Model of Affect and Cognition: How to Explain Cognitive 'Biases and Fallacies' with a Unified Model (April 21, 2009). Available at SSRN: https://ssrn.com/abstract=1392823

Mihnea C. Moldoveanu (Contact Author)

University of Toronto - Joseph L. Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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