Revealed preference: detection via economic reasoning
We've been talking about choice-makers choosing from a set of possibilities, toward fulfillment of some objective.
Objectives cannot be directly observed. Though a choice-maker may announce an objective, the announcement may be false. We can even lie to ourselves about our objectives.
But we can observe what choices are made.
An option selected from a set of possibilities must be at least as preferred as unselected options, when the choicemaker is minimally rational.
And so by observing choices made, we can learn about the true objectives of choice-makers. Even about our own unacknowledged preferences.
This is called the principle of revealed preference.
Facebook posts incorporated:
Revealed preference defined
Objectives cannot be directly observed. Though a choice-maker may announce an objective, the announcement may be false. We can even lie to ourselves about our objectives.
But we can observe what choices are made.
An option selected from a set of possibilities must be at least as preferred as unselected options, when the choicemaker is minimally rational.
And so by observing choices made, we can learn about the true objectives of choice-makers. Even about our own unacknowledged preferences.
This is called the principle of revealed preference.
Facebook posts incorporated:
Revealed preference defined