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Information, Credibility, and Endogenous Preferences

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  • Marek Jenöffy-Lochau

    (Büro am Carlsplatz)

Abstract

The origin of preferences is a black box in economic theory. The Signal-Preference Model (SPM) models the origin of preferences. This becomes possible because of two methodological modifications in comparison to mainstream economics. First, I do not work with states. Second, I do not work with probabilities of states. Information an individual receives influences the individual's preferences. Information is transmitted by signals. Signals transport an information value to the individual. Information values are aggregated in a preference function. The model makes predictions which preferences are stable and which may vary. The model introduces the credibility of a signal as a variable that influences the process of preference formation. The model can aggregate influences from four sources Hausman mentions as the origin of preferences creating a holistic preference model.

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  • Marek Jenöffy-Lochau, 2013. "Information, Credibility, and Endogenous Preferences," Post-Print hal-04139636, HAL.
    • Handle: RePEc:hal:journl:hal-04139636
    Note: View the original document on HAL open archive server: https://hal.science/hal-04139636
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    References listed on IDEAS

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