Selective Memory Equilibrium

59 Pages Posted: 28 Jan 2022 Last revised: 27 Apr 2023

See all articles by Drew Fudenberg

Drew Fudenberg

Massachusetts Institute of Technology (MIT)

Giacomo Lanzani

Massachusetts Institute of Technology (MIT) - Department of Economics

Philipp Strack

Yale, Department of Economics

Date Written: January 22, 2022

Abstract

When agents are more likely to remember some experiences than
others but update beliefs as if the experiences they remember are
the only ones that occurred, their limit strategy are selective memory equilibria.
We illustrate how selective memory equilibrium can be used to understand the long-run effects of several well-documented memory biases.
We then extend our analysis to cases where the expected number of recalled experiences is bounded and experiences that are recalled once are more likely to be
recalled again, and to agents who are only partially naive about their selective memory.

Keywords: Memory, Learning, Underinference, Misspecification

Suggested Citation

Fudenberg, Drew and Lanzani, Giacomo and Strack, Philipp, Selective Memory Equilibrium (January 22, 2022). Available at SSRN: https://ssrn.com/abstract=4015313 or http://dx.doi.org/10.2139/ssrn.4015313

Drew Fudenberg

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

Giacomo Lanzani (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
E52-391
Cambridge, MA 02142
United States

Philipp Strack

Yale, Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

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