Directed Cognition

What is directed cognition?

Thinking takes time and effort. Directed cognition is a behavioral economics model of how people decide which information is worth looking for next.

How it works

Gabaix and colleagues model that decision with a partly short-sighted calculation: estimate the benefit of the next search operation, then weigh it against the cost. In their experiments, searching for information either cost money or used scarce time. The model predicted aggregate search patterns and sometimes fit them better than a fully rational benchmark.

Directed cognition asks how someone decides whether another bit of information is worth the trouble.

Example: when to stop comparing products

Imagine choosing between two laptops. You already know their prices, but not their battery life. If learning the battery life could change which one you buy, checking that attribute may be worth the time. If the remaining unknown is a small difference in weight that would not change your choice, another search may offer too little benefit to justify its cost.

The model represents this continue-or-stop decision by comparing the estimated value of the next search operation with its cost. The example is hypothetical: it illustrates the calculation without claiming that shoppers always make it correctly or consciously.

Why it matters

More information comes at a cost. Understanding a decision means looking at what people choose to investigate, what they leave unexamined, and when they stop searching.

Source: Costly Information Acquisition: Experimental Analysis of a Boundedly Rational Model.