Behavioral heterogeneity arising from cognitive differences among economic agents plays a fundamental role in the economy. To explain this heterogeneity, models of iterative thinking assume that certain choices indicate higher cognitive effort. That is, choices are used to infer the cognitive...

This extensive note synthesizes current psychological and neuroscientific research on how people make decisions with moral implications. Research summaries and scenarios illustrate critical issues. Learning Objective: Introduce students to the connections (and contradictions) between classical...