Preference 170162 220037834 2008-06-18T00:09:59Z Modify 380367 /* Preference in economics */ remove garbled sentence {{otheruses}} {{citations missing|article|date=July 2007}} '''Preference''' (also called "[[taste (sociology)|taste]]" or "penchant") is a concept, used in the [[social science]]s, particularly [[economics]]. It assumes a real or imagined "choice" between alternatives and the possibility of rank ordering of these alternatives, based on [[happiness]], satisfaction, [[gratification]], enjoyment, [[utility]] they provide. More generally, it can be seen as a source of [[motivation]]. In cognitive sciences, individual preferences enable choice of objectives/goals. Also, more consumption of a normal good is generally (but not always) assumed to be preferred to less consumption. ==Preference in economics== In [[microeconomics]], preferences of consumers and other entities are modelled with preference relations. Let S be the set of all "packages" of goods and services (or more generally "possible worlds"). Then ≤ is a '''preference relation''' on S if it is a [[binary relation]] on S such that a ≤ b if and only if b is at least as preferable as a. It is conventional to say "b is '''weakly preferred''' to a", or just "b is preferred to a". If a ≤ b but not b ≤ a, then the consumer '''strictly prefers''' b to a, which is written a < b. If a ≤ b and b ≤ a then the consumer is '''indifferent''' between a and b. Completeness is more philosophically questionable. In most applications, S is an infinite set and the consumer is not conscious of all preferences. For example, one does not have to make up one's mind about whether one prefers to go on holiday by plane or by train if one does not have enough money to go on holiday anyway (although it can be nice to dream about what one would do if one would win the lottery). However, preference can be interpreted as a hypothetical choice that could be made rather than a conscious state of mind. In this case, completeness amounts to an assumption that the consumer can always make up their mind whether they are indifferent or prefer one option when presented with any pair of options. [[Behavioral economics]] investigates the circumstances when human behavior is consistent and inconsistent with these assumptions. The '''indifference relation''' ~ is an [[equivalence relation]]. Thus we have a [[quotient set]] S/~ of [[equivalence class]]es of S, which forms a [[partition of a set|partition]] of S. Each equivalence class is a set of packages that is equally preferred. If there are only two commodities, the equivalence classes can be graphically represented as [[indifference curve]]s. Based on the preference relation on S we have a preference relation on S/~. As opposed to the former, the latter is [[antisymmetric relation|antisymmetric]] and a [[total order]]. It is usually more convenient to describe a preference relation on S with a [[utility]] function <math>u : S \rightarrow \textbf R</math>, such that u(a) ≤ u(b) [[if and only if]] a ≤ b. A [[Continuous function|continuous]] utility function always exists if ≤ is a continuous rational preference relation on <math>R^n</math>. For any such preference relation, there are many continuous utility functions that represent it. Conversely, every utility function can be used to construct a unique preference relation. All the above is independent of the prices of the goods and services and independent of the budget of the consumer. These determine the '''feasible''' packages (those he or she can afford). In principle the consumer chooses a package within his or her budget such that no other feasible package is preferred over it; the utility is maximized. ==Notation== Sometimes symbols like <math>\prec \succ \precsim \succsim \sim</math> are used as a reminder that equivalence is not necessarily [[equality]]. ==References== <div class="references-small"> *Kreps, David (1990). ''A Course in Microeconomic Theory''. New Jersey: Princeton University Press. ISBN 0-691-04264-0 *Mas-Colell, Andreu; Whinston, Michael; & Green, Jerry (1995). ''Microeconomic Theory''. Oxford: Oxford University Press. ISBN 0-19-507340-1 <references/> </div> ==See also== {{wiktionarypar|prefer}} *[[Arrow's paradox]] *[[Behavioral finance]] *[[Economic subjectivism]] *[[Envy]] *[[Gibbard-Satterthwaite theorem]] *[[Greed]] *[[Hope]] *[[Lexicographic preferences]] *[[Motivation]] *[[Pairwise comparison]] *[[Preference regression (in marketing)]] *[[Preferential voting]] *[[Preferred number]] *[[Revealed preference]] *[[Second-order desire]] *[[Sexual desire]] *[[Sexual orientation]] *[[Strict weak ordering]] *[[Time preference theory of interest]] ==External links== *[http://plato.stanford.edu/entries/preferences/ Stanford Encyclopedia of Philosophy article on 'Preferences'] *[http://www.icrsurvey.com/docs/Customer%20Preference%20Formation_1205.doc Customer preference formation] (white paper from [[ICR/International Communications Research|ICR]]) {{Game theory}} [[Category:Microeconomics]] [[Category:Consumer theory]] [[cs:Preference]] [[de:Präferenz]] [[es:Preferencia]] [[fr:Préférence]] [[ko:선호]] [[hu:Preferánsz]] [[fi:Preferenssi]]