From here on, I will argue that the commitment I ascribe to experimental economics is indeed highly plausible. More specifically, I argue that the commitment can be plausibly defended under each of three major conceptions of what preference in economics are.
What Preferences Are
I start by outlining behaviorism, mentalism, and dispositionalism. This is done to show that even though there has been an extensive debate about what preference in economics are, this debate has remained silent regarding the commitments in virtue of which I have reconstructed the two paradigms, i.e., commitments about where (the constituents of) preferences are.
According to behaviorism, preference relations are nothing more than concise descriptions of patterns in choice-behavior. For example, ascribing a preference X over Y to some agent is just to say that she would choose X in some circumstances, where Y is an available alternative (Clarke, 2016). Behaviorists make no ontological commitments apart from that a particular choice takes place in certain circumstances when assigning a preference to an agent.
Despite the long history of behaviorism in economics, also known as revealed preference theory (see Hands 2013), most philosophers nowadays reject it because of the following two arguments. The first argument highlights that we also need information on the agent’s beliefs to infer preferences from choice-behavior. Yet, if preferences were identical with choice, information on an agent’s choice alone would suffice to inform us about the agent’s preferences (Hausman 2011). The second argument holds that being identical with choice-behavior would prevent preferences from figuring into causal explanations of choice-behavior because an event cannot cause itself (cf. Vredenburgh, 2020). Yet, economists often refer to preferences when offering causal explanations of choice-behavior. While some rebuttals to these arguments have been put forward (e.g., Vredenburgh 2020, Thoma, 2021), most philosophers argue that we must identify preferences with something other than choice-behavior (e.g., Hausman 2011, Guala 2019).
The most common alternatives to behaviorism are mentalistic conceptions of preferences that identify them with some kind of mental state. There are several proposals concerning what kind of mental states preferences are. Some authors hold that preferences are (conscious) intentional states. Intentional states are mental states with propositional content. On this view, preferences are something like conditional intentions or conditional desires (see McDaniel & Bradley 2008). Others like Hausman (2011) understand preferences as total comparative evaluations. Total comparative evaluations are a kind of summary attitude that is formed by taking various beliefs and partial evaluations into account. Consequently, for Hausman, preferences in economics do not refer to a simple desire or intention but to the outcome of a sophisticated cognitive process. Moreover, some authors also advance specific views on what mental states in general are. Dietrich & List (2016) subscribe to functionalism. Functionalism holds that mental states should not be individuated by their intrinsic properties, but by the causal role they play in a certain system of inputs, outputs, and other mental states.
As this shows, there is no agreement within mentalism on what mental states are, let alone on what kinds of mental states preferences are. Yet, no matter the details, the following problem applies to all versions of mentalism (see Guala 2019). Economists frequently build choice-theoretic models that aim at describing entities we usually do not ascribe mental states to. For example, there are choice-theoretic models of mice and hermit crabs (e.g., Elwood & Appel 2009). More frequently, we find choice-theoretic models of firms, states, and political parties. To list a few examples, consider the Cournot-Nash model of firms in oligopolistic markets (see Mas-Colell et al., 1995) or the use of the Hotelling model to model a two-party system (Stokes, 1963). Yet, mentalism restricts the applicability of choice-theoretic models to entities with the relevant mental states. Consequently, so the argument goes, mentalism has trouble accounting for how economists employ the concept of preference.
Dispositionalism tries to combine the best of behaviorism and mentalism without their costs. According to dispositionalism, preferences are belief-dependent dispositions with multiply realizable supervenience bases (Guala, 2019). “Belief” here is meant to be a short-hand for an agent’s informational state. The supervenience base of a disposition is the set of (causal) properties that constitutes or instantiates the disposition. Roughly speaking, under dispositionalism, an agent prefers X over Y iff she is disposed (in a way that depends on her informational state) to choose X in some circumstance, where Y is also an available option. In contrast to behaviorism, ascribing a preference under dispositionalism incurs an ontological commitment regarding the existence of a particular disposition. Moreover, what is important for dispositionalism is that it assumes the supervenience bases of preferences to be multiply realizable, i.e., different sets of causal properties can constitute the same preference. Hence, entities with different causal properties like firms and humans can have the same preferences in the same circumstances. It, therefore, can account for the ascription of preferences to entities that lack mental states.
While the dispositional conception avoids many of the pitfalls of the other two conceptions (see Guala 2019 for details), it is also the least developed of the three accounts. For instance, it needs further explication how exactly preferences are supposed to be dependent on informational states. Moreover, one might worry that dispositionalism can hardly be separated from functionalism. Imagine that the causal roles for being a mental state of the type ‘preference’ would be so coarse-grained that any set of entities that is such that it constitutes the supervenience base of a preference under dispositionalism also realizes a mental state of the type ‘preference’ under functionalism. In this case, the two conceptions would ascribe the same preferences to the same entities. The only difference would be that functionalism would insist on calling them mental states (see also Clarke 2020).
So far, I have outlined the main positions in the extant debate about preferences in economics. As should become apparent, the debate does not tell us much about the question of where the constituents of preferences are located. Yet, most of the literature tacitly sides with H&B-experiments in implicitly assuming that the constituents of preferences are entirely located within agents’ bodies. For instance, Guala (2019, p. 398) tells us that human preferences are “indeed mainly constituted by psychological mechanisms.” Moreover, Dietrich & List (2016) solely focus on neurophysiological processes when talking about the realizers of mental states. Hence, the commitment that I ascribed to H&B-experiments appears to be the commonsense position. Therefore, one might be skeptical of the plausibility of the commitment that I assigned to experimental economics.
Hence, I now argue that this commitment can be made plausible for all three conceptions of what preferences are. Within each of the next sub-sections, I focus on one of the three conceptions and demonstrate that my reconstruction can be plausibly defended under this conception.
Mentalism and the Where-Question
Let us start with mentalism. Initially, one might suspect that preferences – qua being mental states – cannot be constituted by environments. However, in contemporary philosophy of mind, Clark & Chalmers (1998) offer a forceful critique of the idea that mental states and cognitive processes are solely located within our bodies. Their so-called parity argument aims at establishing that we should not restrict mental states to being solely realized by events that take place within the human body because of the active role of our environments in cognition. They call this the extended mind hypothesis. I now show that, under mentalism, their argument can make plausible that the constituents of preferences are partially located in an agent’s environment. Their argument rests on the parity-principle, which can be stated as follows.
If an entity plays the same causal role as another entity that we already consider to be part of the constituents of some mental states or cognitive-process, we should also consider the first entity to be part of the constituents of a mental state or cognitive-process.
To support the parity-principle, Clark and Chalmers provide the example of Otto, who has Alzheimer’s. Otto heavily relies on a notebook to store and retrieve important information. Imagine Otto wants to visit his local history museum. He will consult his notebook, retrieve the information that the museum is located at 112 A-Caterer-Street, and walk to 112 A-Caterer-Street. We can explain Otto’s behavior by stating that he wants to go to the museum and believes that 112 A-Caterer-Street is the location of the museum. Now consider the case of Inga. Inga does not have the disease. She can successfully store a lot of information in her biological memory. Imagine she also wants to visit the history museum. She will consult her biological memory, retrieve the relevant information, and walk to 112 A-Caterer-Street. Like in the case of Otto, we can explain her behavior by stating that she wants to go to the museum and believes that 112 A-Caterer-Street is the location of the museum. The upshot of this example is that Otto’s notebook plays the same causal role in certain cognitive processes as Inga’s internal biological memory. Hence, according to Clark and Chalmers, if we classify Inga’s biological memory as the realizer of a mental state, we should also afford this classification to Otto’s notebook.
To see how the parity-principle applies to preferences under mentalism, recall the example of Bob. Here, the parity-principle implies that the pen and the notebook are part of the constituents of Bob’s preferences because the pen and the notebook play an essential causal role in bringing about Bob’s choice-behavior. In particular, they play the same role as storing the beating-relations in one’s biological memory.
It could be objected that the parity-principle varies with respect to its plausibility for different versions of mentalism. Clark and Chalmers are heavily influenced by functionalism when presenting their argument and it is often suggested that their argument depends on functionalism (e.g., Carter et al., 2016). However, given that the application of choice-theory to agents like firms implies that (coarse-grained) functionalism is the most plausible version of mentalism anyway, these worries do not have to bother us here. Under the most plausible version of mentalism, there is a viable strategy to articulate the idea that the constituents of preferences are partially located in the agent’s environment.
There is a vast literature on the status of the parity-principle (for a good overview see Menary 2010). Building on this literature one could, of course, argue against the plausibility of the idea that preferences as mental states can be partially realized by an agent’s environment. It could, for instance, be argued that a relevant difference between biological memory and the pen and notebook is that biological memory cannot be as easily decoupled from the agent as the pen and the notebook. Chalmers and Clark would respond here that even biological memory is sometimes decoupled from the agent, e.g., when the agent is asleep or knocked out. No matter how successful one thinks this rebuttal is in general, the corresponding objection is not very troublesome if we are concerned with preferences in economics. Economists want to model specific social interactions. Therefore, it does not matter whether the notebook is always accessible, but only whether the agent has access to the notebook in the kind of choice-situations that are the target of our model.
Assessing the plausibility of various other arguments surrounding the parity-principle would obviously go beyond the scope of this paper. However, my discussion already highlights that it has an initial plausibility in the case of preferences. Hence, under mentalism, my reconstruction of the disagreement between the two paradigms can be plausibly stated as experimental economists accepting the extended mind hypothesis for preferences, while H&B-experimenters reject it.Footnote 11
Dispositionalism and the Where-Question
Let me now show how the relevant commitment can be made plausible under dispositionalism. To do so, I introduce a co-opted version of the parity-principle that applies to dispositionalism:
If an entity plays the same causal role in bringing about choice-behavior as another entity that we already consider to constitute part of the supervenience base of some preference, we should also consider the first entity to constitute part of the supervenience base of a preference.
The co-opted parity-principle is not about cognitive processes or mental states. Consequently, it applies to preferences independently of whether they are mental states. Under dispositionalism, applying the co-opted parity-principle to the example of Bob gives us the same result as applying the parity-principle under mentalism. Hence, dispositionalism and the co-opted parity-principle allow us to hold that the constituents of preferences (i.e., their supervenience base) can be partially located in the agents’ environment.
One could object that I conflate the supervenience base of a disposition with the mechanisms that produce choice. While a supervenience base is the set of properties that, given certain background conditions and the relevant laws of nature, causally suffices for the manifestation of the disposition, the mechanism encompasses everything that leads to the production of choice-behavior (i.e., background conditions and laws of nature). However, what counts as merely part of the mechanisms (e.g., initial conditions) and what should count as the constitutive supervenience base is exactly what is at stake here. If we say Bob has intransitive preferences over the options in my example and we think that preferences are dispositions, we have to include the environment into the supervenience base of the disposition. If we decide that the environment is only part of the mechanism that produces choice-behavior, we could not attribute these preferences to Bob.
The objection may be fueled by the view that the supervenience base of a disposition must be entirely constituted by intrinsic properties. Lewis (1986, p. 61) distinguishes “intrinsic properties, which things have in virtue of the way they themselves are, from extrinsic properties, which they have in virtue of their relations or lack of relations to other things.” While he holds that the supervenience base of a disposition must be entirely constituted by intrinsic properties (cf. Lewis 1997), other authors like McKitrick (2003) hold that the supervenience bases can include extrinsic properties. An example of a plausible extrinsic disposition is the disposition of a key to open a door. It only has this disposition because of the properties of the lock. Similarly, Bob’s intransitive preferences would be an extrinsic disposition he only possesses because of features of his environment. Hence, under dispositionalism, my reconstruction of the disagreement between the two paradigms can be plausibly stated as experimental economists accepting that there are certain extrinsic dispositions, while H&B-experimenters reject this idea.
Behaviorism and the Where-Question
The case of behaviorism must be approached in a slightly different way. Behaviorists identify preferences directly with choice. Hence, under behaviorism, the where-question cannot pertain to constituents because preferences do not stand in a constitutive relationship to realizers or supervenience bases. Nevertheless, we can formulate a version of the where-question for behaviorism.
Under behaviorism, we usually have some leeway in terms of how we should individuate agents’ preferences, i.e., which preferences we assign to agents. Given this leeway, even a behaviorist may wish to argue that we should be wary of preference assignments that make their shapes crucially dependent on certain features of the environment.
To better appreciate what is at stake here, consider the following example inspired by Thoma (2021): if we observe someone eating a spoon of avocado cream, we have several ways of characterizing this choice. We could assign a ‘preference for avocado cream (over the other available options)’ or a ‘preference for green paste (over the other available options).’ Prima facie, both options seem legitimate under behaviorism. Yet, these assignments should not be treated as equally legitimate. Just imagine that we go for the ‘green paste’ option and, therefore, predict that the person will eat a full spoon of wasabi if we present her with a menu that swaps avocado cream with wasabi. In this instance, our prediction is likely to go wrong. Hence, not every way of individuating an agent’s preferences is equally acceptable under behaviorism. So, how exactly should we individuate preferences?
Thoma (2021) argues that we can solely focus on an agent’s beliefs to decide how to individuate preferences and black-box the “motivating factors” behind choice. She holds that this allows us to retain behaviorism. More precisely, she proposes a limited mentalism about beliefs according to which descriptions of options should be consistent with the agent’s beliefs and should include any feature for which “there are choice situations where the agent would make a different choice when she believes that feature is present or absent respectively” (Thoma, 2021, p. 173). As this demonstrates, plausible versions of behaviorism need to put restrictions on legitimate preference assignments.
In this spirit, even a behaviorist could agree with proponents of the H&B-tradition and argue that we should not assign preferences whose shapes crucially depends on what they consider arbitrary environmental influences. To give a simple example, if we could describe an agent’s choices or preferences in such a way that they are transitive, but the transitivity under this description would crucially depend on the presence of certain environmental features, we should not describe an agent’s preferences in this way.
Consequently, even a behaviorist can hold that certain environmental influences should make us wary about the assignment of certain preferences. Yet, other behaviorists might see no problem in describing an agent’s choices in a way that makes them dependent on the presence of those environmental factors. They might, for instance, hold that relevant patterns in choice-behavior are such that we need to assign preferences whose features crucially dependent on the presence of those environmental factors. Under my reconstruction of the two experimental paradigms, the second brand of behaviorist would have reason to side with experimental economics, while the first brand may side with the H&B-tradition. Consequently, the where-question is also relevant under behaviorism. Under behaviorism, my reconstruction of the disagreement between the two paradigms can be plausibly restated as a disagreement about how to individuate preferences.Footnote 12
To sum up Sect. 3, the commitment about preferences I ascribed to experimental economics can be made plausible under mentalism, dispositionalism, and behaviorism. This, in turn, supports the plausibility of my reconstruction of the two paradigms.
Moreover, I take my argument to highlight a new dimension in the debate about preferences in economics. The debate has only focused on what preferences are. Yet, my argument indicates that it should also focus on where (the constituents of) preferences are.