INTRANSITIVITY, UTILITY, AND THE AGGREGATION OF PREFERENCE PATTERNS

Kyklos, 1991

The French engineer-economist Jules Dupuit (1804-66) fashioned theories of consumer behavior and entrepreneurship that stressed the following propositions: (1) that goods are "bundles" of utility-generating characteristics and (2) that the entrepreneur's job is the dual task of discovering which combinations of characteristics consumers what to buy and then pricing these combinations so as to simultaneously maximize sellers' profits and consumers' utility. Unlike some recent models patterned after K. J. Lancaster, Dupuit's theory of entrepreneurship was not deterministic. He perceived competition in the dynamic sense and emphasized market processes rather than end states. Copyright 1991 by WWZ and Helbing & Lichtenhahn Verlag AG

The European Journal of the History of Economic Thought, 2018

Probabilistic models of choice (between sure prospects) have become a standard modeling practice since the 1980s, notably through the widespread use of the Logit Multinomial Model pioneered by . However, the idea to model consumer's behavior as a probabilistic behavior, hence accounting for some kind of behavioral instability in the pure theory * Correspondence may be addressed to . Acknowledgments. I am most grateful to Philippe Mongin, Jean Baccelli, Ivan Moscati, and colleagues who have attended various presentations of this article for their constructive and insightful comments. I am sole responsible for any remaining error. of rational choice, dates back to the 1930s and led to significant investigations in the 1950s. It is the purpose of this article to confront three attempts by economists at developing models of individual choice that go beyond standard ordinalist utility theory through introducing principles of probabilistic behavior. We discuss first Georgescu-Roegen's neglected contributions to this subject, though he pioneered the definition of probabilistic preference in 1936 and came back on the subject intensively in the 1950s. We then present Marschak's (and his co-authors) attempts at axiomatizing a probabilistic model of choice in the same period. The third contribution studied is that of Quandt, who provides a more operational style of modeling. This set of contributions is discussed against a general background of transformations of the theory of rational behavior and of the methods proper to it.

Theory and Decision, 2009

A decision under 'complete uncertainty' is one where the decision maker knows the set of possible outcomes for each decision, but cannot assign probabilities to those outcomes. This way, the problem of ranking decisions is reduced to a problem of ranking sets of outcomes. All rankings that have emerged in the literature in this domain imply transitivity. In the current study, transitivity is subjected to an empirical evaluation in two experiments, where subjects are asked to choose between sets of monetary consequences. After analysis with a Bayes Factor, very few violations of transitivity were found. It can be concluded that transitivity seems a plausible condition for the ranking of sets of monetary consequences.

Introduction to Formal Philosophy, 2018

Preferences and choices have central roles in moral philosophy, economics, and the decision sciences in general. In a formal language we can express and explore the properties of preferences, choices, and their interrelations in a precise way, and uncover connections that are inaccessible without formal tools. In this chapter, the plausibility of different such properties is discussed, and it is shown how close attention to the logical details can help dissolve some apparent paradoxes in informal and semi-formal treatments.

Northeastern Journal of Agricultural and Resource Economics, 1989

The neoclassical paradigm has proven to be a rich approach for evaluating a variety of issues for individual and social decision-making. However, an increasing body of literature suggests that actual behavior systematically violates the neoclassical utility model. This paper reviews a number of alternative models for decision-making. Results from the literature show several examples of apparently “irrational” behavior that can be explained in terms of these alternative motivations. The paper also extends the received literature by examining in some detail the implications of one such model which is based on the psychological feeling of ambivalence. The paper demonstrates that ambivalence has the potential for explaining the appearance of intransitive choices, the use of rules of thumb in decision-making and the large discrepancies between stated willingness-to-pay and willingness-to-accept, all of which have been observed in various settings. There are potentially great rewards from...

Frontiers in psychology, 2017

The first goal of this study was to validate the Rational-Experiential Inventory (REI) and the Cognitive Reflection Test (CRT) through checking their relation to the transitivity axiom. The second goal was to test the relation between decision strategies and cognitive style as well as the relation between decision strategies and the transitivity of preferences. The following characteristics of strategies were investigated: requirements for trade-offs, maximization vs. satisficing and option-wise vs. attribute-wise information processing. Respondents were given choices between two multi-attribute options. The options were designed so that the choice indicated which strategy was applied. Both the REI-R and the CRT were found to be good predictors of the transitivity of preferences. Respondents who applied compensatory strategies and the maximization criterion scored highly on the REI-R and in the CRT, whereas those who applied the satisficing rule scored highly on the REI-R but not in...

Judgment and Decision Making, 2016

Transitivity is the assumption that if a person prefers A to B and B to C, then that person should prefer A to C. This article explores a paradigm in which Birnbaum, Patton and Lott (1999) thought people might be systematically intransitive. Many undergraduates choose C =

Social Choice and Welfare, 2018

Arrow's classical axiom of independence of irrelevant alternatives may be more descriptively thought of as binary independence. This can then be weakened to ternary independence, quaternary independence, etc. It is known that under the full domain these are not real weakenings as they all collapse into binary independence (except for independence over the whole set of alternatives which is trivially satisfied). Here we investigate whether this still happens under restricted domains. We show that for different domains these different levels of independence may or may not be equivalent. We specify when and to what extent different versions of independence collapse into the same condition.

The European Journal of the History of Economic Thought, 2007

This paper examines the history of the neoclassical theory of consumer demand from 1871 to 1971 by bringing into play the knowledge theory of the Marburg School, a Neo-Kantian philosophical movement. The work aims to show the usefulness of a Marburg-inspired epistemology in rationalizing the development of consumer analysis and, more generally, to understand the principles that regulate the process of knowing in neoclassical economics.