Failures of Contingent Thinking
Artificial Intelligence
2026-01-26 v4 Theoretical Economics
Abstract
We present a behavioral definition of an agent's perceived implication that uniquely identifies a subjective state-space representing her view of a decision problem, and which may differ from the modeler's. By examining belief updating within this model, we formalize the recent empirical consensus that reducing uncertainty improves contingent thinking, and propose a novel form of updating corresponding to the agent 'realizing' a flaw in her own thinking. Finally, we clarify the sense in which contingent thinking makes state-bystate dominance more cognitively demanding than obvious dominance.
Cite
@article{arxiv.2007.07703,
title = {Failures of Contingent Thinking},
author = {Evan Piermont and Peio Zuazo-Garin},
journal= {arXiv preprint arXiv:2007.07703},
year = {2026}
}