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The market for preferences

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  • Peter E. Earl
  • Jason Potts

Abstract

Learning processes are widely held to be the mechanism by which boundedly rational agents adapt to environmental changes. We argue that this same outcome might also be achieved by a different mechanism, namely specialisation and the division of knowledge, which we here extend to the consumer side of the economy. We distinguish between high-level preferences and low-level preferences as nested systems of rules used to solve particular choice problems. We argue that agents, while sovereign in high-level preferences, may often find it expedient to acquire, in a pseudo-market, the low-level preferences in order to make good choices when purchasing complex commodities about which they have little or no experience. A market for preferences arises when environmental complexity overwhelms learning possibilities and leads agents to make use of other people's specialised knowledge and decision rules. Copyright 2004, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Cambridge Journal of Economics.

Volume (Year): 28 (2004)
Issue (Month): 4 (July)
Pages: 619-633

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Handle: RePEc:oup:cambje:v:28:y:2004:i:4:p:619-633

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Cited by:
  1. Su-Hyun Berg & Robert Hassink, 2013. "Creative industries from an evolutionary perspective: A critical literature review," Papers in Evolutionary Economic Geography (PEEG) 1306, Utrecht University, Section of Economic Geography, revised Apr 2013.
  2. Prof John Foster, 2004. "From Simplistic to Complex Systems in Economics," Discussion Papers Series 335, School of Economics, University of Queensland, Australia.
  3. Jason Potts & John Foster & Anna Straton, 2010. "An entrepreneurial model of economic and environmental co-evolution," Discussion Papers Series 409, School of Economics, University of Queensland, Australia.
  4. Marcelo De Carvalho Pereira, 2014. "When Competition May Hinder Technologydiffusion: The Case Of Internet Access Services In Brazil," Anais do XL Encontro Nacional de Economia [Proceedings of the 40th Brazilian Economics Meeting] 152, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  5. Christian Schubert & Andreas Chai, 2012. "Sustainable Consumption and Consumer Sovereignty," Papers on Economics and Evolution 2012-14, Philipps University Marburg, Department of Geography.
  6. Saras Sarasvathy & Nicholas Dew, 2005. "New market creation through transformation," Journal of Evolutionary Economics, Springer, vol. 15(5), pages 533-565, November.
  7. Jason Potts, 2007. "Exchange and evolution," The Review of Austrian Economics, Springer, vol. 20(2), pages 123-135, September.
  8. Maurizio Pugno, 2011. "Scitovsky and the income-happiness paradox," Working Papers 2011-07, Universita' di Cassino, Dipartimento di Scienze Economiche.
  9. Davies, Antony & Cline, Thomas W., 2005. "A consumer behavior approach to modeling monopolistic competition," Journal of Economic Psychology, Elsevier, vol. 26(6), pages 797-826, December.
  10. Jason Potts & Stuart Cunningham & John Hartley & Paul Ormerod, 2008. "Social network markets: a new definition of the creative industries," Journal of Cultural Economics, Springer, vol. 32(3), pages 167-185, September.
  11. Andreas Chai & Alessio Moneta, 2011. "Back to Engel? Some evidence for the hierarchy of needs," Papers on Economics and Evolution 2011-13, Philipps University Marburg, Department of Geography.
  12. Prof John Foster, 2007. "A micro-meso-macro perspective on the methodology of evolutionary economics: integrating history, simulation and econometrics," Discussion Papers Series 343, School of Economics, University of Queensland, Australia.
  13. Christian Schubert, 2012. "Is novelty always a good thing? Towards an evolutionary welfare economics," Journal of Evolutionary Economics, Springer, vol. 22(3), pages 585-619, July.
  14. Earl, Peter E. & Peng, Ti-Ching & Potts, Jason, 2007. "Decision-rule cascades and the dynamics of speculative bubbles," Journal of Economic Psychology, Elsevier, vol. 28(3), pages 351-364, June.
  15. Christian Schubert, 2009. "Welfare Creation and Destruction in a Schumpeterian World," Papers on Economics and Evolution 2009-14, Philipps University Marburg, Department of Geography.
  16. Jason Potts, 2009. "Why creative industries matter to economic evolution," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 18(7), pages 663-673.
  17. Peter Earl & Tim Wakeley, 2010. "Alternative perspectives on connections in economic systems," Journal of Evolutionary Economics, Springer, vol. 20(2), pages 163-183, April.
  18. Foster, Michele M. & Earl, Peter E. & Haines, Terry P. & Mitchell, Geoffrey K., 2010. "Unravelling the concept of consumer preference: Implications for health policy and optimal planning in primary care," Health Policy, Elsevier, vol. 97(2-3), pages 105-112, October.
  19. Peter Earl & Jason Potts, 2013. "The creative instability hypothesis," Journal of Cultural Economics, Springer, vol. 37(2), pages 153-173, May.

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