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Preference purification and the inner rational agent: A critique of the conventional wisdom of behavioural welfare economics

Author

Listed:
  • Gerardo Infante

    (University of East Anglia)

  • Guilhem Lecouteux

    (Ecole Polytechnique)

  • Robert Sugden

    (University of East Anglia)

Abstract

Neoclassical economics assumes that individuals have stable and context-independent preferences, and uses preference-satisfaction as a normative criterion. By calling this assumption into question, behavioural findings cause fundamental problems for normative economics. A common response to these problems is to treat deviations from conventional rational-choice theory as mistakes, and to try to reconstruct the preferences that individuals would have acted on, had they reasoned correctly. We argue that this preference purification approach implicitly uses a dualistic model of the human being, in which an inner rational agent is trapped in an outer psychological shell. This model is psychologically and philosophically problematic.

Suggested Citation

  • Gerardo Infante & Guilhem Lecouteux & Robert Sugden, 2016. "Preference purification and the inner rational agent: A critique of the conventional wisdom of behavioural welfare economics," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 16-02, School of Economics, University of East Anglia, Norwich, UK..
  • Handle: RePEc:uea:wcbess:16-02
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    References listed on IDEAS

    as
    1. Robert Sugden, 2004. "The Opportunity Criterion: Consumer Sovereignty Without the Assumption of Coherent Preferences," American Economic Review, American Economic Association, vol. 94(4), pages 1014-1033, September.
    2. Pedro Bordalo & Nicola Gennaioli & Andrei Shleifer, 2013. "Salience and Consumer Choice," Journal of Political Economy, University of Chicago Press, vol. 121(5), pages 803-843.
    3. David K. Levine & Drew Fudenberg, 2006. "A Dual-Self Model of Impulse Control," American Economic Review, American Economic Association, vol. 96(5), pages 1449-1476, December.
    4. Isabelle Brocas & Juan D. Carrillo, 2008. "The Brain as a Hierarchical Organization," American Economic Review, American Economic Association, pages 1312-1346.
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    6. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard H, 1990. "Experimental Tests of the Endowment Effect and the Coase Theorem," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1325-1348, December.
    7. Chen Li & Zhihua Li & Peter Wakker, 2014. "If nudge cannot be applied: a litmus test of the readers’ stance on paternalism," Theory and Decision, Springer, vol. 76(3), pages 297-315, March.
    8. Koszegi, Botond & Rabin, Matthew, 2008. "Choices, situations, and happiness," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1821-1832, August.
    9. Nathan Berg & Gerd Gigerenzer, 2010. "As-if behavioral economics: neoclassical economics in disguise?," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 18(1), pages 133-166.
    10. Hausman,Daniel M., 2012. "Preference, Value, Choice, and Welfare," Cambridge Books, Cambridge University Press, number 9781107695122, March.
    11. B. Douglas Bernheim & Antonio Rangel, 2009. "Beyond Revealed Preference: Choice-Theoretic Foundations for Behavioral Welfare Economics," The Quarterly Journal of Economics, Oxford University Press, vol. 124(1), pages 51-104.
    12. Yuval Salant & Ariel Rubinstein, 2008. "(A, f): Choice with Frames -super-1," Review of Economic Studies, Oxford University Press, vol. 75(4), pages 1287-1296.
    13. Chris M. Wilson & Catherine Waddams Price, 2010. "Do consumers switch to the best supplier?," Oxford Economic Papers, Oxford University Press, vol. 62(4), pages 647-668, October.
    14. Hausman,Daniel M., 2012. "Preference, Value, Choice, and Welfare," Cambridge Books, Cambridge University Press, number 9781107015432, March.
    15. Cubitt, Robin P. & Sugden, Robert, 2001. "On Money Pumps," Games and Economic Behavior, Elsevier, vol. 37(1), pages 121-160, October.
    16. B. Douglas Bernheim & Antonio Rangel, 2004. "Addiction and Cue-Triggered Decision Processes," American Economic Review, American Economic Association, vol. 94(5), pages 1558-1590, December.
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    18. Matthew Rabin, 2013. "Incorporating Limited Rationality into Economics," Journal of Economic Literature, American Economic Association, vol. 51(2), pages 528-543, June.
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    Citations

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    Cited by:

    1. Roberto Fumagalli, 2016. "Decision sciences and the new case for paternalism: three welfare-related justificatory challenges," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 47(2), pages 459-480, August.
    2. Committee, Nobel Prize, 2017. "Richard H. Thaler: Integrating Economics with Psychology," Nobel Prize in Economics documents 2017-1, Nobel Prize Committee.
    3. Bogliacino, Francesco & Codagnone, Cristiano, 2017. "Microfoundations, Behaviour, and Evolution: Evidence from Experiments," MPRA Paper 82479, University Library of Munich, Germany.
    4. Guilhem Lecouteux, 2015. "PHD THESIS SUMMARY: Reconciling normative and behavioural economics," Post-Print halshs-01427084, HAL.
    5. Robert Sugden, 2014. "Characterising competitive equilibrium in terms of opportunity," Working Papers 14-02, Chapman University, Economic Science Institute.
    6. repec:spr:inrvec:v:64:y:2017:i:2:d:10.1007_s12232-016-0264-1 is not listed on IDEAS
    7. Dold, Malte, 2017. "Back to Buchanan? Explorations of welfare and subjectivism in behavioral economics," Discussion Paper Series 2017-03, University of Freiburg, Wilfried Guth Endowed Chair for Constitutional Political Economy and Competition Policy.
    8. repec:kap:jrisku:v:54:y:2017:i:1:d:10.1007_s11166-017-9254-2 is not listed on IDEAS
    9. repec:kap:jrisku:v:54:y:2017:i:1:d:10.1007_s11166-017-9253-3 is not listed on IDEAS
    10. Sergio Beraldo, 2017. "An Impossibility Result on Nudging Grounded in the Theory of Intentional Action," CSEF Working Papers 485, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 30 Sep 2017.

    More about this item

    Keywords

    preference purification; inner rational agent; behavioural welfare economics; libertarian paternalism; context-dependent preferences;

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D60 - Microeconomics - - Welfare Economics - - - General

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