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The economic consequences of memory limitations (With Taisuke Imai)

Since the beginning of history, humans have been codifying important information, storing it in safe and accessible ways. Recently, economists have started investigating imperfect human memory as a unifying cognitive cause of behavioral mistakes. In this paper, we develop an information acquisition model, whose assumptions are rooted in the psychological findings on human memory, to identify the contexts in which memory limitations are a promising explanation of human mistakes despite information being codified. Our results are consistent with documented empirical patterns and provide a map empiricists can use to decide whether to investigate the role of memory limitations in the settings they study.