A large amount of evidence from psychology and economics shows that individuals' behaviors systematically deviate from the standard economic theory which assumes full consciousness. In order to study the limitations in consciousness, I investigate human cognition and consciousness theoretically and experimentally in the four chapters of this thesis. In the first chapter, building on the works of Carrillo and Mariotti (2000) and Benabou and Tirole (2002), I formulate an intra-person, multiple-self model of how motivated memory including amnesia and delusion may relate to the individual's degree of present bias. I posit the notion of (non-)conscious choice in which the individual habituates into being forgetful or delusional to enhance the motivation for one's future selves. In eq...[ Read more ]

A large amount of evidence from psychology and economics shows that individuals' behaviors systematically deviate from the standard economic theory which assumes full consciousness. In order to study the limitations in consciousness, I investigate human cognition and consciousness theoretically and experimentally in the four chapters of this thesis. In the first chapter, building on the works of Carrillo and Mariotti (2000) and Benabou and Tirole (2002), I formulate an intra-person, multiple-self model of how motivated memory including amnesia and delusion may relate to the individual's degree of present bias. I posit the notion of (non-)conscious choice in which the individual habituates into being forgetful or delusional to enhance the motivation for one's future selves. In equilibrium, the model endogenizes the individual's state of motivated memory and particularly delusion resulting from a high level of present bias. In chapter two, I extend Benabou and Tirole (2002)'s model by incorporating the possibility of interaction between players on cooperation to study the relation between memory bias, self-confidence and social behavior. In the third chapter, I design a controlled incentivized experiment using the Ravens IQ test to test the theory introduced in the first chapter. I find overall support for its implications except for the significant incidence of positive confabulation. This leads me to extend my basic model to capture this possibility as an equilibrium outcome. In the last chapter, I conduct experiment to study different measures of cognitive ability, compare the culture and gender difference in cognition, and test the relations between cognitive ability and some other decision making traits, like time preference, risk preference, etc.