Piaget's last stage of formal operational thought begins around ages 11-15; only about 30% of the population reaches this fourth stage. Adolescents become more idealistic, abstract, and hypothetical in their thinking. They have a more sophisticated understanding of causality (events are usually multi-determined) and use the hypothetical-deductive method (of generating hypotheses and testing them systematically). They can use combinatorial reasoning (testing more than one variable at a time), propositional logic (judging the truth of logical relationships), and meta-cognition (thinking about their own thought processes). These factors make adolescents better problem solvers, and also better arguers because they can compare alternatives, reason between the specific and abstract, and do not accept opinions unquestioningly. Adolescents are now capable of selective, shiftable, and divided attention, and both their short term and long-term memory improve. There are three constructs of adolescent egocentrism.

Imaginary audience where much time is spent thinking about themselves and how they compare with others; they imagine that their behavior is being carefully scrutinized by others, that their own feelings are unique, and that no one else can understand how they feel,
Personal fable involving feelings of invulnerability and uniqueness, and a sense of great destiny, and
Foundling fantasy, which is a belief that one is not biologically related to one's parents, but merely raised by them.

In terms of social cognition, adolescents can understand many points of view besides their own. Additionally, they begin to understand the idea of social conventions. They have a growing sense of empathy, and they are better able to explain others' thoughts and feelings, not just describe them, an ability that increases with maturity.

Regarding language development, teenagers have increased vocabularies−they can use more sophisticated words and more conditional phrases (e.g., however, if-then). They can understand satire, metaphors, proverbs and other intricacies of speech because they are now able to pay attention to multiple dimensions at once. Language also serves a social function (in the use of special words and phrases, as well as slang).

A major focus in the cognitive development of adolescents is why adolescents take risks, and how they reason the consequences. According to the behavioral decision theory, there is an economic reasoning process involved in deciding to engage in a risky behavior. There are costs and benefits to each decision (e.g. time, money, trouble, injury, looking cool), and adolescents weigh the costs and benefits before engaging in these behaviors. Adolescents may be more sensitive to the costs of a situation (e.g. not wanting to look un-cool in front of their friends if they don't take the risk), and adolescents judge the likelihood of costs happening differently than adults. Several factors play into this, including the personal fable (adolescents believe the consequences won't happen to them), adolescents need for novelty, and the importance of peers at this age. Adolescents who feel they have "nothing to lose" are also more likely to engage in risky behaviors (e.g. unprotected sex, fast driving, using drugs).