Template-type: ReDif-Paper 1.0
Author-Name: Dietrich Franz 
Author-Name: List Christian 
Author-workplace-name: METEOR
Title: A reason-based theory of rational choice
Abstract: The standard rational choice paradigm explains an individual’s preferences by his beliefs and his fundamental desires. For instance, someone’s preference for joining the army might be explained by certain beliefs about what life in the army is like and a desire for such a life. While beliefs may change (by new information), fundamental desires are totally fixed. One shortcoming of this paradigm is that reasons and motivations play no explicit role. Some of the more fundamental preference changes that one can undergo seem to reach beyond information-learning and to involve a change in the reasons or goals by which one is fundamentally motivated. Such changes of motivating reasons may come in connection with a changing ability to abstractly represent certain aspects of the world (like the thirteenth move in a game) or to imagine certain qualitative aspects of the world (like feelings of complete loneliness). Standard rational choice models implicitly assume away such changes. This paper proposes a formal reason-based model of preferences. The model explains an individual’s preferences by the set of reasons that motivate him. The preference of our example individual for joining the army would be explained by the set of reasons that motivate him, such as service to his country, an athletic body, and comradeship. Preference change in our model thus stems not exclusively from new information but often also from a change of the set of motivating reasons. If our example individual suddenly loses his preference for joining the army and joins a charity, new reasons (such as worldwide justice) might have become motivating while others (such as an athletic body) might have lost their motivational power. Our notion of a ‘(motivating) reason’ is open to different interpretations and applications, like ones related to conceptualisation or imagination abilities. We formulate two natural axioms on reason-based preferences, the first ensuring that preferences are determined by the motivating reasons and the second ensuring that preferences change in a coherent way as additional reasons become motivating. These two axioms are shown to imply a parsimonious representation of preferences: a single binary relation (which ranks the consistent reason sets) is sufficient to generate all individual preferences across possible individual states (i.e., possible sets of motivating reasons).
Keywords: mathematical economics; 
Series: Research Memoranda
Creation-Date: 2009
Number: 057
File-URL: http://digitalarchive.maastrichtuniversity.nl/fedora/objects/guid:70dfea1a-4e9e-470c-a241-022e5fb7f571/datastreams/ASSET1/content
File-Format: application/pdf
File-Size: 444338
Handle: RePEc:unm:umamet:2009057