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Thoughts matter: a theory of motivated preference

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  • Matthew G. Nagler

    (City University of New York
    City College of New York)

Abstract

This paper develops a model of individual decision-making under bounded rationality in which discretionary cognitive adjustment creates a durable stock that complements choice of action. While it increases utility, adjustment also entails a cost, because focusing attention optimally is effortful and mental resources are scarce. Associated behavioral phenomena are categorized based on whether the operative motivation in adjusting is forward-looking utility maximization or justification of prior action. The theory is in line with prior conceptions of cognitive dissonance, but also offers a more empirically consistent explanation of the endowment effect, persuasive advertising, and sunk-cost effects than existing accounts.

Suggested Citation

  • Matthew G. Nagler, 2023. "Thoughts matter: a theory of motivated preference," Theory and Decision, Springer, vol. 94(2), pages 211-247, February.
    • Handle: RePEc:kap:theord:v:94:y:2023:i:2:d:10.1007_s11238-022-09891-y
    DOI: 10.1007/s11238-022-09891-y
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