We study decision problems where (a) preference parameters are de.ned to include psychological/moral considerations and (b) there is a feedback effect from chosen actions to preference parameters. In a standard decision problem the chosen action is required to be optimal when the feedback effect...

Standard Economics assumes that decision makers carefully reflect and meditate on each alternative. Grounded on evidence from Psychology this thesis relaxes this assumption and develops a theoretical framework with imperfect reflection. We analyse the implications for both Positive and Normative...