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Economic Analysis: Theory and Practice

Effect of cognitive distortions caused by errors in information processing on decision-making by economic agents

Vol. 23, Iss. 1, JANUARY 2024

Received: 5 November 2020

Received in revised form: 29 November 2020

Accepted: 10 December 2020

Available online: 30 January 2024


JEL Classification: D81, D91, E71

Pages: 76–90


Mikhail V. GRECHKO Southern Federal University (SFEDU), Rostov-on-Don, Russian Federation

ORCID id: not available

Larisa A. KOBINA Southern Federal University (SFEDU), Rostov-on-Don, Russian Federation

ORCID id: not available

Subject. This article examines the issues related to the cognitive potential of behavioral and institutional economics and irrationality in decision-making.
Objectives. The article aims to develop an application toolkit to investigate the mechanism of cognitive biases influence on decision-making by economic agents.
Methods. For the study, we used the prospect theory and expert survey techniques.
Results. Based on the cognitive potential of interdisciplinary decision theory, the article proves that most economic agents in the face of incomplete information prefer individual information, rather than a priori probability information.
Conclusions. The results of the study can be useful to create a tool to manage consumer choice.

Keywords: behavioral analysis, consumer choice, decision theory, economic behavior


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