In Search of Homo Economicus: Preference Consistency, Emotions, and Cognition

Abstract:     
Understanding the roles of emotion and cognition in forming preferences is critical in helping firms choose effective marketing strategies and consumers make appropriate consumption decisions. In this work, we investigate the role of the emotional and cognitive systems in preference consistency (transitivity). Participants were asked to make a set of binary choices under conditions that were aimed to tap emotional versus cognitive decision processes. The results of three experiments consistently indicate that automatic affective responses are associated with higher levels of preference transitivity than deliberate cognitive considerations, and suggest that the basis of this central aspect of rational behavior - transitivity - lies in the limbic system rather than the cortical system.

Keywords: Transitivity, Emotion, Cognition, Preferences, Rationality

JEL Classifications: D00, M31

Working Paper Series