Meta‐Preferences: Reconsidering Contemporary Notions of Free Choice

There has been no shortage of challenges to that most fundamental of all neo‐classical assumptions according to which people always act so as to maximise their utility. The most frequently heard objection has centred on the observation that acts of altruism are all around us. This incontestable fact has not led to a rejection of the self‐interest assumption but has instead resulted in the incorporation of altruistic actions into the standard utility function. While there may be legitimate doubts about the process of converting a positive statement into a tautology, this tautological sense of utility maximisation will be retained throughout this essay. Following Houthakker, in all that ensues it will be assumed that “preference is related to choice as the possible to the actual. A person prefers a to b if, when confronted with a choice between a and b , he chooses a”(l).