A reason-based theory of rational choice
AbstractThe standard rational choice paradigm explains an individual’s preferences by his beliefs and his fundamental desires. For instance, someone’s preference for joining the army might be explained by certain beliefs about what life in the army is like and a desire for such a life. While beliefs may change (by new information), fundamental desires are totally fixed. One shortcoming of this paradigm is that reasons and motivations play no explicit role. Some of the more fundamental preference changes that one can undergo seem to reach beyond information-learning and to involve a change in the reasons or goals by which one is fundamentally motivated. Such changes of motivating reasons may come in connection with a changing ability to abstractly represent certain aspects of the world (like the thirteenth move in a game) or to imagine certain qualitative aspects of the world (like feelings of complete loneliness). Standard rational choice models implicitly assume away such changes. This paper proposes a formal reason-based model of preferences. The model explains an individual’s preferences by the set of reasons that motivate him. The preference of our example individual for joining the army would be explained by the set of reasons that motivate him, such as service to his country, an athletic body, and comradeship. Preference change in our model thus stems not exclusively from new information but often also from a change of the set of motivating reasons. If our example individual suddenly loses his preference for joining the army and joins a charity, new reasons (such as worldwide justice) might have become motivating while others (such as an athletic body) might have lost their motivational power. Our notion of a ‘(motivating) reason’ is open to different interpretations and applications, like ones related to conceptualisation or imagination abilities. We formulate two natural axioms on reason-based preferences, the first ensuring that preferences are determined by the motivating reasons and the second ensuring that preferences change in a coherent way as additional reasons become motivating. These two axioms are shown to imply a parsimonious representation of preferences: a single binary relation (which ranks the consistent reason sets) is sufficient to generate all individual preferences across possible individual states (i.e., possible sets of motivating reasons).
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Bibliographic InfoPaper provided by Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization in its series Research Memoranda with number 057.
Date of creation: 2009
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Web page: http://www.maastrichtuniversity.nl/web/UMPublications.htm
Other versions of this item:
- Dietrich, Franz & List, Christian, 2009. "A reason-based theory of rational choice," MPRA Paper 36112, University Library of Munich, Germany, revised 2011.
- Franz Dietrich & Christian List, 2010. "A reason-based theory of rational choice," Levine's Working Paper Archive 661465000000000046, David K. Levine.
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D0 - Microeconomics - - General
- C0 - Mathematical and Quantitative Methods - - General
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-12-19 (All new papers)
- NEP-EVO-2009-12-19 (Evolutionary Economics)
- NEP-HPE-2009-12-19 (History & Philosophy of Economics)
- NEP-UPT-2009-12-19 (Utility Models & Prospect Theory)
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- Sandroni, Alvaro & Cherepavov, Vadim & Feddersen, Timothy, 2013. "Rationalization," Theoretical Economics, Econometric Society, vol. 8(3), September.
- Pelosse, Yohan, 2011. "Ontological foundation of Nash Equilibrium," MPRA Paper 39934, University Library of Munich, Germany.
- Dietrich, Franz & List, Christian, 2012. "Mentalism versus behaviourism in economics: a philosophy-of-science perspective," MPRA Paper 37813, University Library of Munich, Germany.
- Dietrich, Franz & List, Christian, 2012. "Reasons for (prior) belief in bayesian epistemology," MPRA Paper 36111, University Library of Munich, Germany.
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