Springer Nature is making SARS-CoV-2 and COVID-19 research free. View research | View latest news | Sign up for updates

Revealed preference and satisficing behavior

Abstract

A much discussed topic in the theory of choice is how a preference order among options can be derived from the assumption that the notion of ‘choice’ is primitive. Assuming a choice function that selects elements from each finite set of options, Arrow (Economica 26:121–127, 1959) already showed how we can generate a weak ordering by putting constraints on the behavior of such a function such that it reflects utility maximization. Arrow proposed that rational agents can be modeled by such choice functions. Arrow’s standard model of rationality has been criticized in economics and gave rise to approaches of bounded rationality. Two standard assumptions of rationality will be given up in this paper. First, the idea that agents are utility optimizers (Simon). Second, the idea that the relation of ‘indifference’ gives rise to an equivalence relation. To account for the latter, Luce (Econometrica 24:178–191, 1956) introduced semi-orders. Extending some ideas of Van Benthem (Pac Philos Q 63:193–203, 1982), we will show how to derive semi-orders (and so-called interval orders) based on the idea that agents are utility satisficers rather than utility optimizers.

References

  1. Arrow K. (1959) Rational choice functions and orderings. Economica 26: 121–127

  2. Bandyopadhyay T., Sengupta K. (1993) Characterization of generalized weak orders and revealed preference. Economic Theory 3: 571–576

  3. Fishburn P. C. (1975) Semiorders and choice functions. Econometrica 43: 975–977

  4. Jamison D. T., Lau L. J. (1973) Semiorders and the theory of choice. Econometrica 41: 901–912

  5. Kim T. (1987) Intransitive indifference and revealed preference. Econometrica 55: 163–167

  6. Klein E. (1980) The semantics of positive and comparative adjectives. Linguistics and Philosophy 4: 1–45

  7. Luce R. D. (1956) Semiorders and a theory of utility discrimination. Econometrica 24: 178–191

  8. Schwarz T. (1976) Choice functions, rationality conditions, and variations on the weak axioms of revealed preference. Journal of Economic Theory 13: 414–427

  9. Simon H. (1955) A behavioral model of rational choice. Quarterly Journal of Economics 59: 98–118

  10. Thomason S. K. (1984) On constructing instants from events. Journal of Philosophical Logic 13: 85–96

  11. Tyson, C. (2003). Revealed preference analysis of bounded rational choice, PhD. thesis, Stanford University.

  12. van Benthem J. (1982) Later than late: On the logical origin of the temporal order. Pacific Philosophical Quarterly 63: 193–203

  13. van Rooij R. (2010) Implicit versus explicit comparatives. In: Egre P., Klinedinst N. (eds) Vagueness and language use. Palgrave MacMIllan, Basingstoke

  14. van Rooij, R. (to appear). Vagueness and linguistics. To appear In Ronzitti (Ed.), Vagueness: A guide, NY: Springer.

  15. Wiener N. (1914) A contribution to the theory of relative position. Proceedings of the Cambridge Philosophical Society 17: 441–449

Download references

Open Access

This article is distributed under the terms of the Creative Commons Attribution Noncommercial License which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.

Author information

Correspondence to Robert van Rooij.

Rights and permissions

Open Access This is an open access article distributed under the terms of the Creative Commons Attribution Noncommercial License (https://creativecommons.org/licenses/by-nc/2.0), which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.

Reprints and Permissions

About this article

Cite this article

van Rooij, R. Revealed preference and satisficing behavior. Synthese 179, 1–12 (2011). https://doi.org/10.1007/s11229-010-9826-z

Download citation

Keywords

  • Revealed preference
  • Satisficing behavior
  • Comparison relation
  • Vagueness