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The impossibility of rational consumer choice

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  • Jakob Kapeller

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  • Bernhard Schütz

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  • Stefan Steinerberger

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    Abstract

    In this paper we show that a rational consumer choice along the lines traditionally suggested might lead to paradoxical results if one considers multidimensional goods, which incorporate a series of incommensurable aspects. Thereby, we explore the similarity between the resulting paradox and Kenneth Arrow’s well known Impossibility Theorem. Based on these considerations we suggest a solution for the former problem along the lines of Herbert Simon and Amos Tversky, which might—if driven to its extreme—even provide a unique and arguably rational solution for consumer choice among multidimensional goods. Eventually, we argue that the resulting framework poses a potentially useful starting point for further developing an evolutionary theory of consumer choice. Copyright Springer-Verlag 2013

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    File URL: http://hdl.handle.net/10.1007/s00191-012-0268-2
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    Bibliographic Info

    Article provided by Springer in its journal Journal of Evolutionary Economics.

    Volume (Year): 23 (2013)
    Issue (Month): 1 (January)
    Pages: 39-60

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    Handle: RePEc:spr:joevec:v:23:y:2013:i:1:p:39-60

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    Related research

    Keywords: Demand; Consumption; Rationality; Choice; Evolutionary economics; B52; D01; D11; D71;

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    1. Richard Nelson & Davide Consoli, 2010. "An evolutionary theory of household consumption behavior," Journal of Evolutionary Economics, Springer, vol. 20(5), pages 665-687, October.
    2. Rabin, Matthew, 1997. "Psychology and Economics," Department of Economics, Working Paper Series qt8jd5z5j2, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    3. Sugden, Robert, 1991. "Rational Choice: A Survey of Contributions from Economics and Philosophy," Economic Journal, Royal Economic Society, vol. 101(407), pages 751-85, July.
    4. Amartya Sen, 1996. "Maximization and the Act of Choice," Harvard Institute of Economic Research Working Papers 1766, Harvard - Institute of Economic Research.
    5. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    6. Liran Einav & Jonathan D. Levin, 2010. "Empirical Industrial Organization: A Progress Report," NBER Working Papers 15786, National Bureau of Economic Research, Inc.
    7. Simon, Herbert A, 1978. "Rationality as Process and as Product of Thought," American Economic Review, American Economic Association, vol. 68(2), pages 1-16, May.
    8. Sugden, Robert, 1985. "Why Be Consistent? A Critical Analysis of Consistency Requirements in Choice Theory," Economica, London School of Economics and Political Science, vol. 52(206), pages 167-83, May.
    9. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132.
    10. J.S. Metcalfe, 2001. "special issue: Consumption, preferences, and the evolutionary agenda," Journal of Evolutionary Economics, Springer, vol. 11(1), pages 37-58.
    11. Kenneth J. Arrow & Herve Raynaud, 1986. "Social Choice and Multicriterion Decision-Making," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511754, December.
    12. Brian J. Loasby, 2001. "special issue: Cognition, imagination and institutions in demand creation," Journal of Evolutionary Economics, Springer, vol. 11(1), pages 7-21.
    13. Andreas Reinstaller & Bulat Sanditov, 2005. "Social structure and consumption: on the diffusion of consumer good innovation," Journal of Evolutionary Economics, Springer, vol. 15(5), pages 505-531, November.
    14. Wang, Ge & Huang, Samuel H. & Dismukes, John P., 2004. "Product-driven supply chain selection using integrated multi-criteria decision-making methodology," International Journal of Production Economics, Elsevier, vol. 91(1), pages 1-15, September.
    15. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
    16. Kenneth J. Arrow, 1950. "A Difficulty in the Concept of Social Welfare," Journal of Political Economy, University of Chicago Press, vol. 58, pages 328.
    17. Marina Bianchi, 1997. "Collecting as a Paradigm of Consumption," Journal of Cultural Economics, Springer, vol. 21(4), pages 275-289, December.
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