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Memory, Beliefs, and Economic Decisions

Project description

How memories influence economic choices

In the complex world of economic decision-making, it remains unclear how our memories shape our beliefs and preferences, and subsequently, our choices. The ERC-funded MemDec project aims to tackle this enigma, drawing inspiration from the intricacies of human memory. Specifically, this initiative will explore the impact of selective retrieval on economic decisions and how it acts as a source of framing effects, introducing us to a new frontier in understanding the psychology of decision-making. The project will investigate belief formation, studying how our perceptions are moulded by sampling information, influenced by cues and interference. It will also look at the risks and intertemporal decision-making, extending insights across various domains, from financial markets to advertising.

Objective

This project builds on the psychology of memory to study how selective retrieval affects economic decisions by shaping beliefs and preferences. The general approach is one in which a person’s past experiences (both domain relevant and domain irrelevant) determine her “core” beliefs and preferences, but changing cues in the environment ignite selective retrieval of specific pieces of information, causing instability in beliefs and preferences. In this way, selective memory acts as a source of framing effects. One project studies belief formation, which is based on sampling of information shaped by similarity to cues (which include the hypotheses being assessed and irrelevant context) and by interference. A second project applies this approach to preferences, studying choice under risk (whereby people selectively retrieve from memory and simulate potential lottery outcomes) and intertemporal choice (whereby people use memory to simulate future rewards). A third project will apply these ideas to the field. Domains of interest are: i) survey measurement of how past domain relevant as well as domain irrelevant experiences shape the perception of new risks i) socio-economic identity and its effect on political opinions, ii) similarity in financial markets, beliefs and asset prices, iv) advertising, and v) instability of fairness norms.

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Call for proposal

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(opens in new window) ERC-2022-ADG

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Host institution

UNIVERSITA COMMERCIALE LUIGI BOCCONI
Net EU contribution

Net EU financial contribution. The sum of money that the participant receives, deducted by the EU contribution to its linked third party. It considers the distribution of the EU financial contribution between direct beneficiaries of the project and other types of participants, like third-party participants.

€ 1 936 400,00
Address
VIA SARFATTI 25
20136 Milano
Italy

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Region
Nord-Ovest Lombardia Milano
Activity type
Higher or Secondary Education Establishments
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Total cost

The total costs incurred by this organisation to participate in the project, including direct and indirect costs. This amount is a subset of the overall project budget.

€ 1 936 400,00

Beneficiaries (1)

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