In the standard economic model, people are unbounded in their ability to think through problems. Regardless of complexity, they can costlessly figure out the optimal choice. They are also unbounded in their self-control. In contrast to the traditional model, a growing body of research interprets economic...

In order to investigate the impact of limited memory on human behavior, I develop a model of memory grounded in psychological and biological research. I assume that people take their memories as accurate and use them to make inferences. The resulting model predicts both over- and underreaction but provides...