Preference Formation and the Axioms of Choice

Standard economic arguments assume that individual preferences satisfy particular axioms of choice (e.g. transitivity or acyclicity). At the same time, preferences are taken as given for purposes of analysis. However, since preferences are formed, the process of formation will affect the preferences created. This article argues that the process of preference formation will not generally result in preferences satisfying the axioms of choice. This result follows from considering preference formation as an intrapersonal version of Sen's Paretian Liberal paradox. This result requires a number of conditions, which are re-interpreted in the setting of individual preference formation and are shown to be reasonable. Several plausible examples show that the impossibility arises in uncontrived and natural situations. The article then outlines the relation of these arguments to other concerns about preference rankings. It concludes that the burden carried in economics and in other disciplines by standard preference rankings or utility functions is misplaced: such rankings are likely to be available to individuals in straightforward circumstances. On the other hand, these conclusions buttress arguments for a conception of preferences that is richer than is possible in standard economics.