Saturday, September 10, 2011

Rational Choice Theory

Can I prefer A > B, B > C, and C > A?

You can program a computer with case directions so that whenever presented with A and B, to click A, whenever provided with B and C, to click B, and whenever provided with C and A, to click C.

But this conflicts with the traditional human view that a person who has three preferences ordered as above has irrational preferences.  However, recent experiments by economists would suggest that most people's preferences are in fact ordered in hypothetical case examples, as above, and not in an objective hierarchical model.  Being that our preferences are ordered in this way, is there any justification for our preference that they be otherwise (i.e. a hierarchical, rationalist model)?

Or should we re-assess what we mean by "rational" then?