The surprising place of cognitive psychology in the work of F.A. Hayek

In 1920, when Hayek was a student, he wrote a manuscript on cognitive psychology, which was published in 1952 as The Sensory Order. From the 1920s to the early 1940s Hayek developed his business cycle theory. The perceptions of economic agents play a central part in this theory. Contrary to what one might expect, however, none of the mental mechanisms of his earlier theory on perception and cognition play a part in his economics. The answer to this apparent anomaly lies in the programmatic character of the whole of Hayek''s work, and in the specific way in which his ideas evolved. His psychology played a prominent role in the later development of his ideas. If Hayek''s psychology influenced his early economics, it did so indirectly, by shaping his methodology. However, there may also be a common influence underlying both Hayek''s psychology and his economic methodology.