Preferences: Neither Behavioural nor Mental

2016

Neoclassical economics assumes that individuals have stable and context-independent preferences, and uses preference-satisfaction as a normative criterion. By calling this assumption into question, behavioural findings cause fundamental problems for normative economics. A common response to these problems is to treat deviations from conventional rational-choice theory as mistakes, and to try to reconstruct the preferences that individuals would have acted on, had they reasoned correctly. We argue that this preference purification approach implicitly uses a dualistic model of the human being, in which an inner rational agent is trapped in an outer psychological shell. This model is psychologically and philosophically problematic.

Economists and philosophers disagree about the concept of choice used in economics. Some behavioural economists argue that economic models of choice will improve as they become more and more psychologically realistic. Don Ross argues that this argument fails because its hidden assumption---that the economic concept of choice is the same as the psychological counterpart---is false. Ross conjectures that the economic concept of choice concerns a population-scale pattern of behavioural changes in response to incentives. We conduct a survey experiment to test two predictions that Ross's conjecture generates. The statistical analysis of our data confirms our predictions, although with some qualifications. In interpreting our results, we distinguish two versions of commonsensible realism, strong and weak, and propose the weak one as a plausible explanation of our results. Weak commonsensible realism also produces further testable hypotheses. Some methodological implications of our study are discussed.

Physica A, 2003

The subjectivist theory of probability specifies certain axioms of rationality which together lead to both a theory of probability and a theory of preference. The theory of probability is used throughout the sciences while the theory of preferences is used in economics. Results in quantum physics challenge the adequacy of the subjectivist theory of probability. As we show, answering this challenge requires modifying an Archimedean axiom in the subjectivist theory. But changing this axiom modifies the subjectivist theory of preference and therefore has implications for economics. As this paper notes, these implications are consistent with current empirical findings in psychology and economics. As we show, these results also have implications for pricing in securities markets.

Proceedings of the Workshop on Rationality …, 2006

We define preference in terms of a constraint sequence, a concept from optimality theory. In case agents only have incomplete information, beliefs are introduced. We propose three definitions to describe different procedures agents may follow to get a preference relation using the incomplete information. Changes of preference are explored w.r.t their sources: changes of the constraint sequence, and changes in beliefs.

Journal of Economic Methodology, 2017

Positive economic models aim to provide truthful explanations of significant (aspects of) economic phenomena. While the notion of 'preferences' figures prominently in micro-economic models, it suffers from a remarkable lack of conceptual clarity and rigor. After distinguishing narrow homo economicus models (self-interest maximization) from broader ones (preference satisfaction) and rehearsing the criticisms both have met, I go into the most promising attempt to date at addressing them, developed by Hausman. However, his definition of preferences as 'total comparative evaluations', I argue, plays into the general disregard that economists have for human psychology. My alternative definition of preferences as 'overall comparative evaluations'and hence as one of the many factors that influence people's behaviorallows for more adequate causal explanations of people's dutiful, committed, and norm-guided actions. Against Hausman but in agreement with Sen, it also allows for (motivated) counterpreferential choice.

International Review of Economics

History of the Human Sciences, 2021

Since its inception in the late 1970s, behavioural economics has gone from being an outlier to a widely recognized yet still contested subset of the economic sciences. One of the basic arguments in behavioural economics is that a more realistic psychology ought to inform economic theories. While the history of behavioural economics is often portrayed and articulated as spanning no more than a few decades, the practice of utilizing ideas from psychology to rethink theories of economics is over a century old. In the first three decades of the 20th century, several mostly American economists made efforts to refine fundamental economic assumptions by introducing ideas from psychology into economic thinking. In an echo of contemporary discussions in behavioural economics, the ambition of these psychology-keen economists was to strengthen the empirical accuracy of the fundamental assumptions of economic theory. In this article, we trace, examine, and discuss arguments for and against complementing economic theorizing with insights from psychology, as found in economic literature published between 1900 and 1930. The historical analysis sheds light on issues and challenges associated with the endeavour to improve one discipline’s theories by introducing ideas from another, and we argue that these are issues and challenges that behavioural economists continue to face today.

Erasmus, 2009

2018

OF THE DISSERTATION Three Essays in the Theory of Preferences by SEYED HASSAN NOSRATABADI Dissertation Director: Oriol Carbonell-Nicolau This dissertation consists of three chapters. The first chapter addresses the classical questions of utility representation and maximization. It relaxes the notion of weak upper continuity (Campbell and Walker (1990)) to obtain a property called partial weak upper continuity and shows that both maximization of preferences and representation by a utility function can be achieved under this new property. The rest of this dissertation focuses on extending revealed preference theory to accommodate behavioral anomalies observed in the experimental data. In particular, I offer a framework to expand the theory of revealed preferences to the case where a DM’s choice is not completely identified with a single preferences. In Chapter 2, I use a divide and conquer procedure in order to expand the revealed preference theory to accommodate behavioral anomalies ...