How the market responds to dynamically inconsistent preferences

McQuillin, Ben; Sugden, Robert

doi:10.1007/s00355-011-0628-0

Cited by 15 publications

(22 citation statements)

References 8 publications

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“…7 Because of the simple structure of choice problems in an exchange economy, there are relatively few ways in which revealed preferences can contravene standard coherence assumptions. The storage economies analysed by McQuillin and Sugden (2012) allow 'irrationality' to take a much wider range of forms. from outside (as in the model of Sugden 2004).…”

Section: Opportunity In An Exchange Economymentioning

confidence: 99%

“…The Opportunity Criterion, as proposed by McQuillin and Sugden (2012), is designed for this kind of analysis. It is a criterion against which, for a given exchange economy, any regime can be assessed:…”

Section: Opportunity Criteriamentioning

confidence: 99%

“…B Robert Sugden r.sugden@uea.ac.uk In this paper, I develop the approach proposed by Sugden (2004) and McQuillin and Sugden (2012), in which the objects of normative assessment are profiles of individuals' opportunity sets. McQuillin and Sugden's papers define an Opportunity Criterion for assessing such profiles.…”

Section: Introductionmentioning

confidence: 99%

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Characterising competitive equilibrium in terms of opportunity

Sugden

2017

Soc Choice Welf

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This paper analyses alternative profiles of opportunity sets for individuals in an exchange economy, without assuming that individuals' choices reveal coherent preferences. It introduces the concept of a 'market-clearing single-price regime', representing a profile of opportunity sets consistent with competitive equilibrium. It also proposes an opportunity-based normative criterion, the Strong Opportunity Criterion, which is analogous with the core in preference-based analysis. It shows that every market-clearing single-price regime satisfies the Strong Opportunity Criterion and that, in the limit as an economy is replicated, only such regimes have this property.

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Section: Opportunity In An Exchange Economymentioning

confidence: 99%

Section: Opportunity Criteriamentioning

confidence: 99%

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Characterising competitive equilibrium in terms of opportunity

Sugden

2017

Soc Choice Welf

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“…A common escape route from this impasse is to argue that individuals whose choices are context-dependent are not revealing the preferences that in some meaningful sense they 1 I have argued for an approach to normative economics which attaches value to individuals' opportunities rather than to the satisfaction of their preferences. This approach does not depend on any assumptions about the coherence of individuals' preference while, in a certain sense, respecting whatever preferences individuals act on (Sugden, 2004(Sugden, , 2007McQuillin and Sugden, 2012). It is therefore not vulnerable to the problems that are the topic of the current paper.…”

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confidence: 99%

Looking for a Psychology for the Inner Rational Agent

Sugden¹

2015

Social Theory and Practice

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Research in psychology and behavioural economics shows that individuals' choices often depend on 'irrelevant' contextual factors. This presents problems for normative economics, which has traditionally used preference-satisfaction as its criterion. A common response is to claim that individuals have context-independent latent preferences which are 'distorted' by psychological factors, and that latent preferences should be respected. This response implicitly uses a model of human action in which each human being has an 'inner rational agent'. I argue that this model is psychologically ungrounded. Although references to latent preferences appear in psychologically-based explanations of context-dependent choice, latent preferences serve no explanatory purpose.

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“…I have proposed an alternative strategy for reconciling behavioural and normative economics (Sugden, 2004b(Sugden, , 2008(Sugden, , 2010McQuillin and Sugden, 2011). One fundamental respect in which this proposal differs from soft paternalism is that it uses opportunity rather than preference satisfaction as its normative criterion.…”

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confidence: 99%

The Behavioural Economist and the Social Planner: To Whom Should Behavioural Welfare Economics Be Addressed?

Sugden

2013

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The behavioural economist and the social planner: to whom should behavioural welfare economics be addressed? Terms of use: Documents inThe behavioural economist and the social planner:to whom should behavioural welfare economics be addressed? Robert SugdenSchool of How assessments of individual welfare should be aggregated has been one of the core theoretical problems of welfare economics, for which there is still no universally accepted solution; but that problem is orthogonal to the topic of this paper. For many years, however, there was general agreement on the criterion for assessing what is good for each individual, considered separately. The traditional criterion is preference-satisfaction: if some individual prefers one state of affairs to another, the former is deemed to be better for him than the latter.This consensus has been disturbed by recent developments in experimental and behavioural economics. As usually applied, the criterion of preference-satisfaction presupposes that each individual has well-formed and reasonably stable preferences over the social states that welfare economics needs to assess. By interpreting those assumed preferences as expressing the individual's judgements about what is good for him, welfare economics can provide a reasonably persuasive justification for the preference-satisfaction criterion. But that presupposition has been called into question by the findings of behavioural economics. Those findings suggest that individuals often come to decision problems without well-defined preferences that pre-exist the particular problem they face;instead, whatever preferences they need to deal with that problem are constructed in the course of thinking about it. Such 'constructed' preferences can be influenced by features of the framing of the problem that seem to have no bearing on the individual's well-being. As a result, the preferences that an individual reveals with respect to given objects of choice (for example, preferences over given bundles of consumption goods) can vary across decision problems according to apparently arbitrary differences of framing. Often, the influence of framing can be explained by reference to the decision-making heuristics that the individual uses to process different decisions problems. But however valuable those heuristics may be #1121 3 in helping an individual with limited cognitive powers to navigate a complex world, it is difficult to maintain that the preferences they construct are the...

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How the market responds to dynamically inconsistent preferences

Cited by 15 publications

References 8 publications

Characterising competitive equilibrium in terms of opportunity

Characterising competitive equilibrium in terms of opportunity

Looking for a Psychology for the Inner Rational Agent

The Behavioural Economist and the Social Planner: To Whom Should Behavioural Welfare Economics Be Addressed?

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