CeDEx Seminar - Jeanne Hagenbach (CNRS – Sciences Po)

This seminar will take place online.

Title: Selective Memory of a Psychological Agent by Jeanne Hagenbach (CNRS, Sciences Po) and Frédéric Koessler (CNRS, PSE).

Abstract: We consider a single psychological agent whose utility depends on his action, the state of the world, and the belief that he holds about that state. The agent is initially informed about the state but has imperfect recall. Before acting, he decides which states to remember and which ones to forget. We model the memory selection process by a multi-self game in which the informed first self voluntarily discloses information to the uninformed second self with identical preferences. While it can be that voluntary perfect recall does not occur in equilibrium, we identify broad categories of psychological utility functions in which it does. We next add the possibility of exogenous memory decay, that is, a probability that the agent forgets but cannot do anything against it. In this case, the agent always voluntarily forgets some information. We finally characterize the partially informative equilibria for various classes of psychological utilities. When the material cost from hiding information is low the agent voluntarily forgets bad enough news. Otherwise, only intermediate information is voluntarily forgotten.