In this paper we show how imperfect memory can imply a preference for increasing payments. We model an agent making a decision regarding effort in two periods where the cost of effort is imperfectly known. Before making the first decision, the agent receives a signal related to the cost of...

In this paper we propose a theory of cognitive dissonance through imperfect memory. Cognitive dissonance is the tendency of a person to engage in self justification after a decision. We offer an interpretation of the single decision cognitive dissonance experiments: an agent has an unknown cost...

It is well-known that laboratory subjects often do not play mixed strategy equilibria games according to the theoretical predictions. However, little is known about the role of cognition in these strategic settings. We conduct an experiment where subjects play a repeated hide and seek game...