A Memory Premium in Choice

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Abstract: We explore the role of memory for choice behavior in unfamiliar environments. Using a unique data set, we document that decision-makers exhibit a ``memory premium.'' They tend to choose in-memory alternatives over out-of-memory ones, even when the latter are objectively better. Consistent with well-established regularities regarding the inner workings of human memory, the memory premium is associative, subject to interference and repetition effects, and decays over time.