New York University

To pursue research projects and community-building activities that will advance the development of Cognitive Economics

  • Amount $997,734
  • City New York, United States
  • Investigator Andrew Caplin
  • Year 2023
  • Program Research
  • Sub-program Economics

Cognitive Economics studies how people make practical decisions in practice. Like Behavioral Economics, it acknowledges that choices do not always follow the rational patterns posited by traditional theorists. But whereas Behavioral Economists are often content to describe, classify, and try to 'nudge' away these anomalies, Cognitive Economists seek explanations for how, why, and when making mistakes might actually make sense.   PI Andrew Caplin has been pursuing this goal through the 'Sloan-NOMIS Program on the Attentional and Perceptual Foundations of Economic Behavior.' Under its auspices, an active community conducting research on decision-making has developed new concepts and approaches that now need testing in the real world. Caplin therefore plans to work with distinguished researchers in psychology, labor economics, and artificial intelligence on experiments that specifically address important workforce questions, too. Cognitive Economics starts with the notion that, in real life, there are costs that constrain decision-making other than monetary ones. Gathering, processing, storing, and analyzing information about the choices available are tasks that take time, effort, and attention. Though harder to measure, cognitive costs can be estimated and included in economic models to show why, how, and when it may make sense to make mistakes. This requires different kinds of analysis performed on different kinds of data. Specifically needed are datasets about what people would have done under other circumstances since the notion of a decision-making error can hardly even be defined otherwise. Having obtained such information about workforce decisions, and having obtained considerable conceptual progress with previous Sloan support, this project will test how well Cognitive Economics can actually answer practical research questions of significant current concern, including how cognitive costs affect individuals’ managerial skills, career trajectories, and ability to work with artificial intelligence. Besides producing novel research, Caplin’s team will organize workshops and conferences, develop new resources that make Cognitive Economics more accessible to students and researchers, and convene a broader Steering Committee to provide coordination among the many research groups and disciplines now affiliated with the field.

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