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Where do preferences come from?

Author

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  • Franz Dietrich
  • Christian List

Abstract

Rational choice theory analyzes how an agent can rationally act, given his or her preferences, but says little about where those preferences come from. Preferences are usually assumed to be fixed and exogenously given. Building on related work on reasons and rational choice (Dietrich and List forthcoming), we describe a framework for conceptualizing preference formation and preference change. In our model, an agent's preferences are based on certain 'motivationally salient' properties of the alternatives over which the preferences are held. Preferences may change as new properties of the alternatives become salient or previously salient properties cease to be salient. Our approach captures endogenous preferences in various contexts and helps to illuminate the distinction between formal and substantive concepts of rationality, as well as the role of perception in rational choice.
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Suggested Citation

  • Franz Dietrich & Christian List, 2010. "Where do preferences come from?," Levine's Working Paper Archive 661465000000001137, David K. Levine.
  • Handle: RePEc:cla:levarc:661465000000001137
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    References listed on IDEAS

    as
    1. Gold, Natalie & List, Christian, 2004. "Framing as Path Dependence," Economics and Philosophy, Cambridge University Press, vol. 20(02), pages 253-277, October.
    2. R. H. Strotz, 1955. "Myopia and Inconsistency in Dynamic Utility Maximization," Review of Economic Studies, Oxford University Press, vol. 23(3), pages 165-180.
    3. Samuel Bowles, 1998. "Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 75-111, March.
    4. Sethi, Rajiv & Somanathan, E., 2001. "Preference Evolution and Reciprocity," Journal of Economic Theory, Elsevier, vol. 97(2), pages 273-297, April.
    5. Franz Dietrich, 2014. "Anti-terrorism policies and the risk of provoking," Journal of Theoretical Politics, , vol. 26(3), pages 405-441, July.
    6. Dufwenberg, Martin & Kirchsteiger, Georg, 2004. "A theory of sequential reciprocity," Games and Economic Behavior, Elsevier, vol. 47(2), pages 268-298, May.
    7. Peter J. Hammond, 1976. "Changing Tastes and Coherent Dynamic Choice," Review of Economic Studies, Oxford University Press, vol. 43(1), pages 159-173.
    8. Dietrich, Franz & List, Christian, 2009. "A reason-based theory of rational choice," MPRA Paper 36112, University Library of Munich, Germany, revised 2011.
    9. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
    10. Dekel, Eddie & Ely, Jeffrey & Yilankaya, Okan, 2004. "Evolution of Preferences," Microeconomics.ca working papers dekel-04-08-13-01-21-07, Vancouver School of Economics, revised 09 Jun 2006.
    11. Michael Bacharach, 2006. "The Hi-Lo Paradox, from Beyond Individual Choice: Teams and Frames in Game Theory," Introductory Chapters,in: Natalie Gold & Robert Sugden (ed.), Beyond Individual Choice: Teams and Frames in Game Theory Princeton University Press.
    12. Fehr, Ernst & Gachter, Simon, 1998. "Reciprocity and economics: The economic implications of Homo Reciprocans1," European Economic Review, Elsevier, vol. 42(3-5), pages 845-859, May.
    13. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    14. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
    15. Franz Dietrich & Christian List, 2011. "A model of non-informational preference change," Journal of Theoretical Politics, , vol. 23(2), pages 145-164, April.
    16. Eddie Dekel & Jeffrey C. Ely & Okan Yilankaya, 2007. "Evolution of Preferences -super-1," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 685-704.
    17. Matthew Rabin, 1998. "Psychology and Economics," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 11-46, March.
    18. Robert Sugden, 2005. "Why rationality is not a consequence of Hume's theory of choice," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 12(1), pages 113-118.
    19. Dryzek, John S. & List, Christian, 2003. "Social Choice Theory and Deliberative Democracy: A Reconciliation," British Journal of Political Science, Cambridge University Press, vol. 33(01), pages 1-28, January.
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    Citations

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    Cited by:

    1. Dietrich, Franz & List, Christian, 2016. "Reason-Based Choice And Context-Dependence: An Explanatory Framework," Economics and Philosophy, Cambridge University Press, vol. 32(02), pages 175-229, July.
    2. repec:hal:wpaper:halshs-01249632 is not listed on IDEAS
    3. Dietrich, Franz & List, Christian, 2016. "Reason-Based Choice And Context-Dependence: An Explanatory Framework," Economics and Philosophy, Cambridge University Press, vol. 32(02), pages 175-229, July.
    4. Acharya, Avidit & Blackwell, Matthew & Sen, Maya, 2015. "Explaining Attitudes from Behavior: A Cognitive Dissonance Approach," Working Paper Series rwp15-026, Harvard University, John F. Kennedy School of Government.
    5. Robin Cubitt & Daniel Navarro-Martinez & Chris Starmer, 2015. "On preference imprecision," Journal of Risk and Uncertainty, Springer, vol. 50(1), pages 1-34, February.
    6. repec:hal:journl:halshs-01249514 is not listed on IDEAS
    7. Dietrich, Franz & List, Christian, 2016. "Mentalism Versus Behaviourism In Economics: A Philosophy-Of-Science Perspective," Economics and Philosophy, Cambridge University Press, vol. 32(02), pages 249-281, July.
    8. Dietrich, Franz & List, Christian, 2016. "Mentalism Versus Behaviourism In Economics: A Philosophy-Of-Science Perspective," Economics and Philosophy, Cambridge University Press, vol. 32(02), pages 249-281, July.
    9. Anaïs Carlin, 2014. "Consumer Choice Theory and Social Learning," GREDEG Working Papers 2014-13, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.

    More about this item

    JEL classification:

    • 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

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