Nonconscious cognitive reasoning: A neglected ability shaping economic behavior

Abstract

This paper argues for the inclusion of both conscious and nonconscious reasoning in economic decision making. Vast differences in the capacities of these two sources of cognitive reasoning results in a greater reliance on nonconscious reasoning resources, although the most complex decisions depend on an automatic intermingling of conscious and nonconscious resources. Each decision resource is capable of independently processing data, determining relationships, learning about the underlying structure, and making economic decisions. In contrast to conventional analysis which implicitly views mental activity as costless, the binding limits on conscious reasoning entails high opportunity costs, and the need to make an enormous number of decisions in a timely manner in order to avoid losses due to foregone decisions. People engage in a maximization process to optimize the efficiency and accuracy of their mental resources for decision making. People choose the most efficient and least costly resources that will maximize overall utility.