Choice: Basic set-up: Objectives
The most fundamental thing about how economists talk and think about choice is the notion that agents choose from a set of possibilities, with the aim of furthering some particular objective.
Part of this: if you don't know and define your objective, you can't expect to make a good choice.
This holds whether you're talking about what to order at the restaurant, how much to spend and how much to save today, what technology to purchase and install, or what macroeconomic policy you want to follow or vote in. Or anything else at all.
You might be ordering from a menu to try to best please your palate within a limited budget or a limited time frame or a limited capacity. (With multiple constraints, basically you just check out what's the best choice toward your objective, subject to each constraint, then compare those constrained best choices and choose the best one that satisfies all constraints.) Or you could be trying to maximize caloric intake, or adhere to a particular dietetic regime, or....
If you were choosing what industry to enter and build plant and equipment for, you might be trying to maximize your long-run stream of profits. Or to provide employment for a particular demographic while remaining financially viable, or to achieve an environmentalist objective, or to evangelize a specific product, or....
Multiple features within objectives can be handled in formal models through the form of the objective or evaluation function, but we're not going to mess explicitly with functions here.
When groups are engaged in joint decision-making, it's important to understand what objective each speaker intends in saying "better" or in recommending policy. Sometimes we talk past each other.
FB posts incorporated:
Basic parsing of choice and the usefulness of a specified objective
The flexible meanings of "objective"
Part of this: if you don't know and define your objective, you can't expect to make a good choice.
This holds whether you're talking about what to order at the restaurant, how much to spend and how much to save today, what technology to purchase and install, or what macroeconomic policy you want to follow or vote in. Or anything else at all.
You might be ordering from a menu to try to best please your palate within a limited budget or a limited time frame or a limited capacity. (With multiple constraints, basically you just check out what's the best choice toward your objective, subject to each constraint, then compare those constrained best choices and choose the best one that satisfies all constraints.) Or you could be trying to maximize caloric intake, or adhere to a particular dietetic regime, or....
If you were choosing what industry to enter and build plant and equipment for, you might be trying to maximize your long-run stream of profits. Or to provide employment for a particular demographic while remaining financially viable, or to achieve an environmentalist objective, or to evangelize a specific product, or....
Multiple features within objectives can be handled in formal models through the form of the objective or evaluation function, but we're not going to mess explicitly with functions here.
When groups are engaged in joint decision-making, it's important to understand what objective each speaker intends in saying "better" or in recommending policy. Sometimes we talk past each other.
FB posts incorporated:
Basic parsing of choice and the usefulness of a specified objective
The flexible meanings of "objective"