Preference
In
In insolvency, the term is used to determine which outstanding obligation the insolvent party has to settle first.
Psychology
In
Economics
In
Consumer preference, or consumers' preference for particular brands over identical products and services, is an important notion in the psychological influence of consumption. Consumer preferences have three properties: completeness, transitivity and non-satiation. For a preference to be rational, it must satisfy the axioms of transitivity and Completeness (statistics). The first axiom of transitivity refers to consistency between preferences, such that if x is preferred to y and y is preferred to z, then x has to be preferred to z.[4][5] The second axiom of completeness describes that a relationship must exist between two options, such that x must be preferred to y or y must be preferred to x, or is indifferent between them.[4][5] For example, if I prefer sugar to honey and honey to sweetener then I must prefer sugar to sweetener to satisfy transitivity and I must have a preference between the items to satisfy completeness. Under the axiom of completeness, an individual cannot lack a preference between any two options.[6]
If preferences are both transitive and complete, the relationship between preference can be described by a
The mathematical foundations of most common types of preferences — that are representable by quadratic or additive functions — laid down by Gérard Debreu[12][13] enabled Andranik Tangian to develop methods for their elicitation. In particular, additive and quadratic preference functions in variables can be constructed from interviews, where questions are aimed at tracing totally 2D-indifference curves in coordinate planes without referring to cardinal utility estimates.[14][15]
Empirical evidence has shown that the usage of rational preferences (and
Individual preferences can be represented as an indifference curve given the underlying assumptions. Indifference curves graphically depict all product combinations that yield the same amount of usefulness. Indifference curves allow us to graphically define and rank all possible combinations of two commodities.[23]
The graph's three main points are:
1. If more is better, the indifference curve dips downward.
2. Greater transitivity indicates that the indifference curves do not overlap.
3. A propensity for diversity causes indifference curves to curve inward.
Risk preference
Risk preference is defined as how much risk a person is prepared to accept based on the expected utility or pleasure of the outcome.
Risk tolerance is a critical component of personal financial planning, that is, risk preference.
In psychology, risk preference is occasionally characterised as the proclivity to engage in a behaviour or activity that is advantageous but may involve some potential loss, such as substance abuse or criminal action that may bring significant bodily and mental harm to the individual.[24]
In economics, risk preference refers to a proclivity to engage in behaviours or activities that entail greater variance returns, regardless of whether they be gains or losses, and are frequently associated with monetary rewards involving lotteries.[25]
There are two different traditions of measuring preference for risk, the revealed and stated preference traditions, which Coexist in psychology, and to some extent in economics as well.[26][27][28]
Risk preference evaluated from stated preferences emerges as a concept with significant temporal stability, but revealed preference measures do not.[29]
Relation to desires
Preferences and
Insolvency
In Insolvency, the term can be used to describe when a company pays a specific creditor or group of creditors. From doing this, that creditor(s) is made better off, than other creditors. After paying the 'preferred creditor', the company seeks to go into formal insolvency like an administration or liquidation. There must be a desire to make the creditor better off, for them to be a preference. If the preference is proven, legal action can occur. It is a wrongful act of trading. Disqualification is a risk.[33] Preference arises within the context of the principle maintaining that one of the main objectives in the winding up of an insolvent company is to ensure the equal treatment of creditors.[34] The rules on preferences allow paying up their creditors as insolvency looms, but that it must prove that the transaction is a result of ordinary commercial considerations.[34] Also, under the English Insolvency Act 1986, if a creditor was proven to have forced the company to pay, the resulting payment would not be considered a preference since it would not constitute unfairness.[35] It is the decision to give a preference, rather than the giving of the preference pursuant to that decision, which must be influenced by the desire to produce the effect of the preference. For these purposes, therefore, the relevant time is the date of the decision, not the date of giving the preference.[36]
See also
- Motivation
- Ordinal Priority Approach
- Preference-based planning (in artificial intelligence)
- Preference revelation[disambiguation needed]
- Choice
- Pairwise comparison
References
- ISSN 0093-5301.
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- ^ Zey, Mary (1998). Rational Choice Theory and Organizational Theory: A Critique. SAGE Publications, Inc. pp. 1–13.
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- ^ Aleskerov, Fuad (2007). Utility Maximization, Choice and Preferences (2 ed.). Springer. pp. 17–52.
- S2CID 6430197.
- ^ Kirsh, Yoram (2017). "Utility and Happiness in a Prosperous Society". OUI – Institute for Policy Analysis Working Paper Series. 37.
- ISBN 9780128120231.
- S2CID 244976714.
- JSTOR 1907852.
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- ^ Herfeld, Catherine (2021). "Revisiting the criticisms of rational choice theories". Philosophy Compass. 17 (1).
- S2CID 154665809.
- ISBN 978-1-352-01080-0.
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- ISSN 2353-1827.)
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: CS1 maint: DOI inactive as of May 2024 (link - S2CID 12544303.
- ISBN 978-0-7623-1384-6, retrieved 2023-04-23
- S2CID 2468108.
- PMID 24761048.
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- ^ S2CID 155414997.
- ^ a b Pettit, Philip. "Desire - Routledge Encyclopedia of Philosophy". www.rep.routledge.com. Retrieved 4 May 2021.
- ^ a b c d Schroeder, Tim (2020). "Desire". The Stanford Encyclopedia of Philosophy. Metaphysics Research Lab, Stanford University. Retrieved 3 May 2021.
- ^ Steven, Keith. "What Is A Preference Under The Insolvency Act 1986". Retrieved October 1, 2018.
- ^ ISBN 9780198722861.
- ISBN 9781782259602.
- ^ Green, Elliot. "Green v Ireland [2011] EWHC 1305 (Ch)". Retrieved December 1, 2022.
General
- Brehm, J.W. (1956). Post-decision changes in desirability of choice alternatives. Journal of Abnormal and Social Psychology, 52, 384–389.
- Coppin, G., Delplanque, S., Cayeux, I., Porcherot, C., & Sander, D. (2010). I'm no longer torn after choice: How explicit choices can implicitly shape preferences for odors. Psychological Science, 21, 489–493.
- Lichtenstein, S., & Slovic, P. (2006). The construction of preference. New York: Cambridge University Press.
- Scherer, K.R. (2005). What are emotions? And how can they be measured? Social Science Information, 44, 695–729.
- Sharot, T., De Martino, B., & Dolan, R.J. (2009). How choice reveals and shapes expected hedonic outcome. Journal of Neuroscience, 29, 3760–3765.
External links
- Stanford Encyclopedia of Philosophy article on 'Preferences'
- Customer preference formation DOC(white paper from International Communications Research)