«Selective Memory of a Psychological Agent», written with Frédéric Koessler (CNRS, Paris School of Economics).
We consider a single psychological agent whose utility depends on his action, the state of the world, and the belief that he holds about that state. The agent is initially informed about the state but has imperfect recall. Before acting, he decides which states to remember and which ones to forget. We model the memory selection process by a multi-self game in which the privately informed first self voluntarily discloses information to the uninformed second self with identical preferences. We identify broad categories of psychological utility functions for which there exists an equilibrium with voluntary perfect recall. In contrast, if there is exogenous memory decay, that is, a probability that the agent forgets and cannot do anything against it, then he usually forgets some information voluntarily. In this case, we characterize the partially informative equilibria for various classes of psychological utilities. If the material cost from hiding information is low, then the agent voluntarily forgets bad enough news. Otherwise, only intermediate information is voluntarily forgotten.
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