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The Impossibility of Rational Consumer Choice: A Clarifying Note

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Kapeller et al. [2012] argue that consumer choice in the presence of multiple- attribute products is structurally equivalent to the social choice problem to which Arrow's famed impossibility theorem applies and that therefore rational consumer choice is impossible. While I do not deny rational choice is impossible in reality, I find this particular theoretical argument against a rational agent model to be, unfortunately, based on an erroneous assertion of equivalence. I demonstrate that the mathematical structure of the consumer choice problem is not equivalent to the social choice problem, and that as a result we cannot apply the Arrow impossibility theorem to the former problem in the manner that the authors do.

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  • Brendan Markey-Towler, 2013. "The Impossibility of Rational Consumer Choice: A Clarifying Note," Discussion Papers Series 506, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uq2004:506
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    File URL: https://economics.uq.edu.au/files/45818/506.pdf
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    Cited by:

    1. Paul Frijters & Benno Torgler & Brendan Markey-Towler, 2016. "On the Problem of Constructing Rational Preferences," The Economic Record, The Economic Society of Australia, vol. 92, pages 68-82, June.

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