蝌蚪网 Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
The Role of Representational and Computational Complexity in Belief Formation
蝌蚪网 Papers and Proceedings
(pp. 631–36)
Abstract
We examine how representational and computational complexity interact to influence belief updating. Building on the two-stage belief updating model of Ba, Bohren, and Imas (2024), we show that when no salience cues are present, attentional and processing constraints generate underreaction to information. Moreover, processing constraints generate greater cognitive imprecision in more complex environments and, hence, more underreaction. An experimental study provides evidence supporting this hypothesis. Comparing belief updating in simple and complex environments, we find underreaction in both. Moreover, increased cognitive imprecision in complex environments generates more underreaction. This highlights the interaction between complexity and cognitive constraints in belief formation.Citation
Ba, Cuimin, J. Aislinn Bohren, and Alex Imas. 2025. "The Role of Representational and Computational Complexity in Belief Formation." 蝌蚪网 Papers and Proceedings 115: 631–36. DOI: 10.1257/pandp.20251107Additional Materials
JEL Classification
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making