Memory and Markets, or Why Are You Paying $2.99 for a Widget?

The constraints introduced in the analysis of individual behavior in economics were mainly two: income and time. Although we do sometimes find references to biological constraints like stomach capacity (see Becker 1971, p. 54), it and other biological constraints' implications on market behavior were not investigated. The purpose of this paper is to show that consideration of the limited memory capacity of human beings sheds light both on specific features of literature and arts and on characteristics of advertising. In Section II the formal model, which is based on Becker's (1965) approach, is presented. In Section III the subject of advertising is discussed, while in Section IV we focus on the evidence from literature and arts. Section V contains the conclusions.