A Theory of Chosen Preferences
B. Douglas Bernheim, Luca Braghieri, Alejandro Martínez-Marquina, David Zuckerman
American Economic Review · 2021 · Volume 111 · Issue 2
Abstract
We propose and develop a dynamic theory of endogenous preference formation in which people adopt worldviews that shape their judgments about their experiences. The framework highlights the role of mindset flexibility, a trait that determines the relative weights the decision-maker places on her current and anticipated worldviews when evaluating future outcomes. The theory generates rich behavioral dynamics, thereby illuminating a wide range of applications and providing potential explanations for a variety of observed phenomena.
Keywords
Consumer Economics: Theory, Criteria for Decision-Making under Risk and Uncertainty, Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making, Economic Sociology, Economic Anthropology, Language, Social and Economic Stratification
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