Behavioral economists have done a great service in connecting psychology and economics. Up to now, however, most have focused on cognitive illusions and anomalies, in order to prove the descriptive failure of neoclassical economic models. The key problems in the cognitive illusions literature...

Given free information and unlimited processing power, should decision algorithms use as much information as possible? A formal model of the decision making environment is developed to address this question and provide conditions under which informationally frugal algorithms, without any...