ABSTRACT OF PAPER
Title: Who is afraid of intransitivity? The fate of Amos Tversky’s 1969 “Intransitivity of preferences” in economics (and in psychology)
Author: Lenfant Jean Sébastien
The debates involving protagonists of the behavioral turn in economics as well as historians of economic thought and philosophers deal mainly with How far economists have been trying to incorporate experimental results from psychology into their modeling and theorizing of economic rationality? (e.g. Kahneman, 2003) The proposed contribution aims at fostering this debate, focusing on an early attempt by Amos Tversky (1969) at challenging a fundamental principle of the theory of economic rationality: the axiom of transitivity of choice. The main idea guiding our historical approach is that “Intransitivity of preferences”, published in 1969, is of utmost interest since it is both challenging a fundamental principle of economics and at the same time laying the methodological foundations for a fruitful interaction between economics and psychology. Actually, since the outcome of the interaction of economics and psychology in the field of decision and choice has been “behavioral economics” and since it is intimately associated with the “Kahneman-Tversky” phrase, it is all the more interesting to reflect on the specific fate of Tversky’s isolated contribution, and to put it in perspective with how economists and psychologists have dealt with transitivity and how they would later refer (or not) to Tversky’s “Intransitivity of Preferences”. In my contribution, my purpose is to identify the seeds of a fruitful collaboration between economists and psychologists and how it turned out to be uncompleted, due to protective efforts by many economists (and by some psychologists too) to avoid challenging one component of rational behavior: transitivity. The main intuition motivating this research is that the topic of transitivity as attracted much attention in the 1950s and 1960s, both on the economists’ and the psychologists’ side, and that this topic could have served as a starting point for building an original research program on the theory of rational behavior. My contention is that Tversky's (1969) article "Intransitivity of preferences" (hereafter IoP) deserves special attention because it possesses many assets to serve as a programmatic article for both economists and psychologists. Actually, it will be argued, IoP did not trigger the methodological and theoretical debates that it should have, and the topic of intransitivity has been tackled only episodically or in a biased manner, although some recent literature seems to reactivate it. The fact is that Tversky’s article was only partly successful in convincing some decision theorists that they should take seriously the issue of intransitivity in individual behavior. It contributed to bridging the methods of experimental psychology with the theoretical stakes of decision and utility theory and thus to attract the economists' attention. Hence, it is first important to figure out the way Tversky’s article was interpreted, why it could be considered as an accomplishment of some research agenda after the work by others on the same topic (e.g. May (1954), Davidson, McKinsey, and Suppes (1955), Quandt (1956), Papandréou, Sauerelander, Bownlee, Hurwicz and Franklin (1957), Davis (1958), Chipman (1960), Morrison (1962)). IoP deals with the conditions under which the central axiom of a stochastic theory of rational choice fails to hold, and it shows that the structure of the process of choice can easily lead subjects to express intransitive choices. I will argue that IoP is also a turning point in Tversky’s own research agenda. It is a programmatic article, widening the scope of the relationships between economists and psychologists, and it contains a subtle argumentation linking the experimental side with the theoretical side of utility theory. Whereas transitivity was a serious subject for economists and psychologists in the 1950s and 1960s, it was so important within the theory of rational behavior–first of all because it is central for the use of a utility function–that abandoning this axiom was seldom conceived of, and would even be considered as a taboo. By focusing on the fate of IoP, we can contribute to the understanding of how reluctant economists have been to integrate all the contributions of psychologists into economics and to reflect on their effort to build–partly with the help of psychologists–theoretical interpretations of instances of intransitive behavior. Thus, we hope to provide some living history of the way psychologists have contributed also to avoid facing intransitivity. Section 1 presents briefly the theme of transitivity of preferences in the 1950s and 1960s (Savage, 1951; Edwards, 1953; May, 1954; Davis, 1958; Davidson and Marschak, 1959; De Groot, Morrison, 1962; Griswold and Luce, 1962; Shepard, 1964; etc.). Section 2 presents Tversky's earlier contributions, focusing on the maturation of his own agenda, in the wake of his mentor and PhD supervisor Ward Edwards and within the wider context of experimental psychology at this time. It holds that Tversky will be among the first psychologists to disconnect the modeling of choice from the measurement issue. Given this stock of past studies, Tversky's goal is to go a step forward in constructing choice situations where Weak Stochastic Transitivity is violated and to understand the elements in the choice situation that lead to this violation and the modeling adapted to it (additive choice). Section 3 gives a synoptic summary of "Intransitivity of preferences", stressing the multifaceted construction of the arguments and discussion of the results. It discusses how far Tversky has been to make his contribution of direct interest to economists, offering probably the first synthesis between the style of economics and the style of psychology in the field of decision theory. Section 4 discusses the reception of Tversky's article by psychologists and economists in the 1970s. In the years immediately following (say 1969-1975), IoP is quoted extensively in psychological decision theory and there is undoubtedly a burst in the amount of articles, experiments, reports, surveys dealing with decision and utility in psychology and behavioral sciences. The results obtained by Lichtenstein, Slovic, Tversky, Kahneman in the 1970s and 1980s will certainly foster experimental studies on decision, putting IoP in the background. As far as IoP is concerned, I circumvent a list of works that mention Tversky’s IoP and analyze the way it is refereed to. Broadly, though Slovic and Lichtenstein (1971) will point, after Tversy, to the importance of the psychological cost of being transitive, most of the references–both in psychology and economics–tend to interpret Tversky’s case of intransitivity a pure empirical finding or artifactual result which cannot be given a general significance. Special attention will be given to the treatment of intransitivities in Kahneman and Tversy’s co-authored articles through the hypothesis of preference reversal. Section 5 discusses the failure and success of IoP to trigger the kind of reflection about rationality that could have lead to a more fruitful collaboration between economics and psychology. I focus on the widespread but soft use of IoP in scholarly literature (psychology, marketing and business, economics, political science). In this respect and with very few exceptions (such as Fishburn’s plea for intransitivity; Fishburn, 1991), the article confirms Kahneman’s main view that “it now appears likely that the gap between the views in the two disciplines [economics and psychology] has been permanently narrowed, but there are no immediate prospects of economics and psychology sharing a common theory of human behavior” (Kahneman, 2003, 166). It also highlights how Tversky’s analysis can still be a starting point for the issue of transitivity in rational choice theory.
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