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Economic complexities and cognitive hurdles: Accounting for specific economic misconceptions without an ultimate cause

Published online by Cambridge University Press:  30 August 2018

David Leiser
Affiliation:
Department of Psychology, Ben-Gurion University of the Negev, Be'er Sheva 8410501, Israel. dleiser@bgu.ac.ilshemeyh@bgu.ac.ilwww.bgu.ac.il/~dleiser
Yhonatan Shemesh
Affiliation:
Department of Psychology, Ben-Gurion University of the Negev, Be'er Sheva 8410501, Israel. dleiser@bgu.ac.ilshemeyh@bgu.ac.ilwww.bgu.ac.il/~dleiser

Abstract

Do folk-economic beliefs have an ultimate cause? We argue that, in many cases, the answer is negative. Cognition is constrained in both scope (via long-term memory [LTM]) and depth (via working memory [WM]). Consequently, laypeople are challenged by concepts essential for understanding complex systems, economics included: aggregation, indirect causation, and equilibrium. We discuss several economic misconceptions arising from this acute mismatch.

Type
Open Peer Commentary
Copyright
Copyright © Cambridge University Press 2018 

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