Benjamin Enke, Thomas Graeber, 18 April 2020

When making economic decisions, people are often aware that they do not know the optimal thing to do. Traditional models of economic decision-making do not account for this ‘cognitive uncertainty’. This column argues that cognitive uncertainty predicts economic actions and beliefs because, in binary settings, it induces people to implicitly compress probabilities towards a 50:50 ‘mental default’. This partially explains behavioural anomalies in choice under risk, choice under ambiguity, belief updating, and survey forecasts of economic variables.

Romesh Vaitilingam, 06 September 2017

Although we like to see ourselves as sensible and logical decision-makers, studies show that our decisions are driven by many other (often subconscious) factors. The Think Forward Initiative is exploring how people can be empowered to make better financial decisions. This column summarises findings presented at the Initiative’s second Summit, which focused around three broad themes: daily financial affairs; finance for the future; and financial literacy.

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