A rational choice model of the biased recall of information

Abstract

This study introduces a rational choice model for a behavioral phenomenon known as differential retrievability, or biased recall. The phenomenon is characterized by the fact that individuals are more likely to recall information which is consistent with their initial preference, expectation, or belief. The model endogenizes the recall of information and ascribes utility functions to agents who must allocate scarce memory resources to pieces of information that are relevant to a future decision. While the biased recall of information was a detriment to groups in a group decision paradigm known as the hidden profile problem, this work shows that this is due to the discrepancy between the subjects' priors and the skewed information structure they were presented. A second model finds the optimal bias in information recall for a single decision maker who must use information from two distinct times to make a policy decision.