Categorical Cognition: A Psychological Model of Categories and Identification in Decision Making
41 Pages Posted: 27 Mar 2003 Last revised: 1 Nov 2010
Date Written: March 2003
There is a wealth of research in psychology demonstrating that agents process information with the aid of categories. In this paper we study this phenomenon in two parts. First, we build a model of how experiences are sorted into categories and how categorization affects decision making. Second, we analyze the personal biases that result from categorization, in economic contexts. We show that discrimination can result from such cognitive processes even when there is no malevolent taste to do so and workers' qualifications are fully observable. The model also provides a framework that is equipped to investigate the social psychological concept of identity, where identity is viewed as self-categorization.
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