Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/329982 
Authors: 
Year of Publication: 
2022
Citation: 
[Journal:] Games [ISSN:] 2073-4336 [Volume:] 13 [Issue:] 6 [Article No.:] 71 [Year:] 2022 [Pages:] 1-15
Publisher: 
MDPI, Basel
Abstract: 
We consider a market setting where a consumer holds either a naive or sophisticated perception of their preference over products. We introduce the concept of a cognitive equilibrium, in which the consumer can transition between the cognitive states of naiveté and sophistication depending on the degree of exploitation in the market. We compare market outcomes under monopoly and competition. While competition unambiguously improves market outcomes when the consumer's cognitive state is exogenous, it can strictly lower gains from trade when cognitive states are endogenously determined.
Subjects: 
naiveté
sophistication
cognition
markets
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
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