Information‐processing models of cognition

Simon, Herbert A.

doi:10.1002/asi.4630320517

Cited by 144 publications

(157 citation statements)

References 89 publications

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“…For example, for Wason's selection task it has been stated that a social rule-breaking context helps (Wason and Shapiro 1971); but see (Manktelow and Over 1991;van Lambalgen 2001, 2004). More convincingly, subjects have been shown to win the game of tic-tac-toe more easily than its equivalent, Number Scrabble (Michon 1967;Simon 1979;Weitzenfeld 1984). The role of context and ecological validity in decision making also plays an important role in the work on 'simple heuristics that make us smart' (Gigerenzer and Todd 1999).…”

Section: Dynamic Gamesmentioning

confidence: 99%

Strategic Reasoning: Building Cognitive Models from Logical Formulas

Ghosh

Meijering

Verbrugge

2014

J of Log Lang and Inf

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This paper presents an attempt to bridge the gap between logical and cognitive treatments of strategic reasoning in games. There have been extensive formal debates about the merits of the principle of backward induction among game theorists and logicians. Experimental economists and psychologists have shown that human subjects, perhaps due to their bounded resources, do not always follow the backward induction strategy, leading to unexpected outcomes. Recently, based on an eye-tracking study, it has turned out that even human subjects who produce the outwardly correct 'backward induction answer' use a different internal reasoning strategy to achieve it. The paper presents a formal language to represent different strategies on a finer-grained level than was possible before. The language and its semantics help to precisely distinguish different cognitive reasoning strategies, that can then be tested on the basis of computational cognitive models and experiments with human subjects. The syntactic framework of the formal system provides a generic way of constructing computational cognitive models of the participants of the Marble Drop game.

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Section: Dynamic Gamesmentioning

confidence: 99%

Strategic Reasoning: Building Cognitive Models from Logical Formulas

Ghosh

Meijering

Verbrugge

2014

J of Log Lang and Inf

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“…For example, prior research finds that agents often use simple heuristics in many decision-making contexts rather than more complex and fully rational approaches; further, employing heuristics often leads to acceptable solutions that are "efficient" when considering the high cognitive cost of employing the more complex fully rational approach (e.g., Tversky and Kahneman, 1974;Simon, 1979).…”

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confidence: 99%

Tax Rates and Corporate Decision Making

et al. 2015

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Abstract:We survey companies and find that many use incorrect tax rate inputs into important corporate decisions. Specifically, many companies use an average tax rate (the GAAP effective tax rate, ETR) to evaluate incremental decisions, rather than using the theoretically correct marginal tax rate. We find evidence consistent with behavioral biases (heuristics, salience) and managers' educational backgrounds affecting these choices. We estimate the economic consequences of using the theoretically incorrect tax rate and find that using the ETR for capital structure decisions leads to suboptimal leverage choices and using the ETR in investment decisions makes firms less responsive to investment opportunities. This paper is the winner of the American Accounting Association 2015 FARS Midyear Meeting Best Paper Award. We thank John Barrios for sharing data on the LinkedIn profiles of our survey respondents. We appreciate helpful comments from Robin Greenwood (the editor), two anonymous referees, Mary Barth, James Chyz, Bryan Cloyd, Russ Lundholm, Lil Mills (discussant), Richard Sansing, Joel Slemrod (discussant), seminar participants at the Baruch College, Columbia Law School, INSEAD conference, International Institute for Public Finance (IIPF) Annual Congress (Dublin), MaTax Conference in Germany, Stanford Summer Camp, University of California, Davis, University of Tennessee, and Virginia Tech University. Thanks to the following people for helpful comments on the development of survey questions: Jennifer Blouin, Merle Erickson, Ken Klassen, Ed Maydew, Peter Merrill, Lil Mills, Sonja Rego, Richard Sansing, Stephanie Sikes, Joel Slemrod, and Ryan Wilson. We also appreciate the support of PricewaterhouseCoopers (especially Peter Merrill) and the Tax Executives Institute (especially Tim McCormally) in asking firms to participate and in reviewing the survey document. We are grateful for the discussions with several tax executives about their role in their company. Finally, each author is grateful for the financial support of the Fuqua School of Business, Paton Accounting Fund at the University of Michigan, MIT Junior Faculty Research Assistance Program, and the Paul Merage School of Business at the University of California-Irvine. All errors are our own. 1Taxes represent a significant cost for most profitable corporations and, thus, are an important input into many corporate decisions (see Shackelford and Shevlin (2001), Graham (2003), and Hanlon and Heitzman (2010) for reviews). According to theory, the marginal tax rate (MTR), defined as the present value of additional taxes paid on an additional dollar of income earned today (Scholes et al., 2014), is the appropriate rate to use to evaluate incremental corporate decisions (MacKie-Mason, 1990; Graham, 1996a, b;Brealey, Myers, and Allen, 2014;and Scholes et al., 2014). Consistent with this theory, prior research finds that the MTR is correlated with firms' capital structure decisions (e.g., Graham, 1996a;Heider and Ljungqvist, 2015). However, prior research also finds...

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“…For decades, research on cognition has been dominated by a generally agreed-upon information processing view [35] [65] [66]. It is rooted in the work of Newell and Simon [49], likening the human brain to a computer that is capable of rapid serial processing of stimuli to achieve the goals of cognition.…”

Section: Cognition and Emotionmentioning

confidence: 99%