1 Answers
In economics and other social sciences, preference is the order that an agent gives to alternatives based on their relative utility, a process which results in an optimal "choice". Preferences are evaluations, concern matters of value, typically in relation to practical reasoning. The character of the preferences is determined purely by a person's tastes instead of the good's prices, personal income and the availability of goods. However, people are still expected to act in their best interest. Rationality, in this context, means that when individuals are faced with a choice, they would select the option that maximizes self-interest. Moreover, in every set of alternatives, preferences arise.
The belief of preference plays a key role in many disciplines, including moral philosophy and decision theory. The logical properties that preferences possess also have major effects on rational choice theory, which has a carry over effect on all modern economic topics.
Using the scientific method, social scientists try to model how people make practical decisions in order to test predictions about human behavior. Although economists are usually not interested in what causes a person to have certain preferences, they are interested in the theory of choice because it gives a background to empirical demand analysis.
Stability of preference is a deep assumption of most economic models. Gary Becker drew attention to this with his remark that "he combined assumptions of maximizing behavior, market equilibrium, and stable preferences, used relentlessly and unflinchingly, form the heart of the economic approach as I see it." More complex conditions of adaptive preference were explored by Carl Christian von Weizsäcker in his paper "The Welfare Economics of Adaptive Preferences" , while remarking that. Traditional neoclassical economics has worked with the assumption that preferences of agents in the economy are fixed. This assumption has always been disputed, and, indeed, in the social sciences outside of neoclassical economics the assumption has never been accepted by anyone.