Cognitive Limitations and Preference Evolution

Timur Kuran


An outcome advocated by some group might owe its realization to an evolutionary process of preference formation over which no one exercises control. Through a model that treats both preferences and collective choices as endogenous, this paper offers a mechanism to account for their co-evolution. The mechanism rests on the cognitive limitations of individuals. People's cognitive limitations make them partition interconnected issues, which gives the functionaries responsible for implementing collective decisions discretion over the actions actually taken. Because of feedback from actual outcomes to individual beliefs, an error in implementation, whether intentional or unintentional, may have a lasting and even growing effect on the distribution of preferences.
 

Journal of Institutional and Theoretical Economics, 146 (June 1991): 241-273.