Dual Decision Processes: Retrieving Preferences when some Choices are Automatic

Abstract

Evidence from the cognitive sciences suggests that some choices are conscious and reflect individual volition while others tend to be automatic. Under these circumstances, standard economic modeling might not always be applicable because not all choices are the result of individual tastes. We propose a behavioral model that can be used in standard economic analysis that formalizes the way in which conscious and automatic choices arise. We then present a novel method capable of identifying a set of conscious choices from observed behavior and discuss its usefulness as a framework for studying asymmetric pricing and empirical puzzles in different settings.