Cognition and Economic Behavior

Summary

Over the past years, economists and psychologists have become increasingly interested in understanding the role of cognition for economic decision-making. In a variety of decision contexts, from prosocial to intertemporal, risky, and strategic decision-making, this current line of research no longer focuses only on decision outcomes, but also on the cognitive antecedents and mechanisms underlying economic behavior. Borrowing established methods and models from psychology and relying on evidence from laboratory and online experiments, this cognition-oriented research is on the rise. However, a more in-depth integration of assumptions about cognitive processes and of empirical process results into theories of economic decision-making is still largely missing.

This VSI invites empirical and theoretical contributions focusing on the role of cognition in economic decision-making. We welcome original research articles as well as theory development supported by reinterpreting, replicating or synthesizing existing findings. We invite contributions (i) clarifying the linkages between cognitive abilities, economic preferences and decisions, as well as (ii) studying cognitive processes underlying economic decisions. We strongly encourage authors to follow open science practices, such as pre-registering their hypotheses and analysis plans and making code as well as data accessible (e.g. through osf.io).

One line of empirical research has focused on whether cognitive abilities (as measured by established tests such as Raven’s matrices) are directly related to economic preferences, such as preferences for risk-taking or patience. A complicating factor in this literature is that both preferences and cognitive abilities can only be measured indirectly. Hence, it is often unclear whether cognitive abilities are indeed related to the true underlying preferences or whether individuals with different cognitive abilities express their preferences with fewer errors or with more consistency. To clarify this question, more direct evidence is needed, as well as better experimental or empirical methods that would help to identify individual mistakes in preference elicitation and thereby reduce measurement error. In more complex settings, further questions arise, such as how to separate the direct linkages between preferences and cognitive abilities from their impact on belief formation, understanding the game form, consistency of strategy implementation and generally incorporating the multiple aspects of strategic interactions.

A second line of empirical research uncovers the cognitive processes occurring during economic decisions and promises a better understanding of what decision-makers consider while they make up their mind about choice options. Are they torn between their options, evaluating them for a long time, or is the choice made quickly? Is attention distributed evenly or focused on specific information? How are preferences mirrored in response times or mouse-trajectories? Addressing such questions requires a specialized methodological portfolio, allowing fine-grained, moment-by-moment process measurements of cognitions (e.g., by analyzing response times, establishing information search patterns via eye-tracking or Mouselab, or studying the attractiveness of competing choice alternatives via mouse-tracking). These process tracing methods leave the decision process itself largely unperturbed. A complementary strand of the literature has sought to determine the role of cognitive processes for economic behavior through exogenously manipulating the availability and use of cognitive resources (e.g., via cognitive load, or time-pressure). These methods have been used to deliver first evidence regarding the cognitive processes underlying individual (risk, patience, consumer choice) and group (cooperation, trust, deception, moral reasoning) decisions, but discussions about the interpretation and validity of some findings persist. Further work in this area could present novel experimental designs that can resolve some of the conflicting findings and improve our understanding of the importance of cognitive processes for economic choice.

Finally, these empirical findings have spurred interest in theory development, further organizing thinking about linkages between cognition and economic behaviour and making joint predictions about choice and process variables. Popular classes of general process models, such as drift diffusion or parallel constraint satisfaction models, make specific predictions about cognitions ongoing during the decision process. Theoretical contributions in this VSI should aim at developing such process models further, demonstrating their relation to heuristics or initial choice biases, applying them to different domains of economic decision-making or testing their predictive power.

This VSI aims at bringing together leading research in economic psychology and behavioural economics to investigate the role of cognition, i.e., cognitive abilities and moment-by-moment cognitive processes, for economic behaviour. Taken together, it will serve four central purposes: (i) to demonstrate the importance and usefulness of including a process perspective to economic decision-making research to reach a better understanding of economic behavior, (ii) to illustrate the plurality of complementary methods suitable for tracing and manipulating cognitive processes in economic decision-making, (iii) to clarify the relationship between cognitive abilities, preferences and economic behaviour and (iv) to develop avenues for integration of cognitive processes into decision theories.

The deadline for submission for this Special Issue is 31st July 2022.

Coordinating Guest Editors

Johannes Lohse (University of Birmingham)

Rima-Maria Rahal (Max Planck Institute for Research on Collective Goods)

Guest editors:

Andis Sofianos (Heidelberg University)

Michael Schulte-Mecklenbeck (University of Bern)

Conny Wollbrant (University of Stirling)

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