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PREFERENCES: NEITHER BEHAVIOURAL NOR MENTAL

FRANCESCO GUALA

Working Paper no. 5/2017

FEBRUARY 2017

FRANCESCO GUALA

Working Paper n. 2011-18

SETTEMBRE 2011

ARE PREFERENCES FOR REAL?

CHOICE THEORY, FOLK PSYCHOLOGY,

AND THE HARD CASE FOR COMMONSENSIBLE REALISM

FRANCESCO GUALA

Working Paper n. 2011-18

SETTEMBRE 2011

1

Preferences:NeitherBehaviouralnorMental*

FrancescoGuala

UniversityofMilan,Italy

Abstract:Recentdebatesonthenatureofpreferencesineconomicshavetypicallyassumedthattheyare

to be interpreted either as behavioural regularities or as mental states. In this paper I challenge this

dichotomyandarguethatneitherinterpretationisconsistentwithscientificpracticeinchoicetheoryand

behaviouraleconomics.Preferencesaredispositionswithamultiplyrealizablecausalbasis,whichexplains

whyeconomistsarereluctanttomakeacommitmentabouttheirinterpretation.

Wedon’tsay‘solubilityisacertainphysical-chemicalstructure’,butrather

thatthesolubilityofthosesubstancesthataresolubleisexplainedbytheir

possessionof a certainphysical-chemical structure. Similarly […] ifwe say

[…] that preferring A to B is ‘synthetically identical with’ possessing a

certain physical-chemical structure […] then we let ourselves in for what

seemstomeremarkableand insufficientlymotivatedextensionsofusage.

(Putnam1975:417)

1.Introduction

Somephilosophicalcontroversiesneverdie.Thedebateabouttheinterpretationofpreferencesandutility1

ineconomicsflaredupattheendofthenineteenthcentury;2inthe1940sand1950seconomistsseemed

to converge on a shared interpretation, but the consensuswas fragile:with the rise of behavioural and

experimentaleconomics,thecontroversyhasrestartedforcefullyduringthepastdecade.3Themainbone

* TheideasthatformthecoreofthispaperwerepresentedatseminarsheldattheuniversitiesofBayreuth,

Innsbruck,Helsinki,Paris1,andTurin.I’mgratefultoMikaelCozic,FranzDietrich,RobertoFumagalli,CyrilHedoin,ChristianList,CaterinaMarchionni,GianlucaPozzoni,BobSugden,JackVromen,PhilipWichardt,andmanyotherparticipantstotheaboveseminarsfortheirsuggestions,commentsandcritiques.IvanMoscatideservesspecialgratitude,forseveralconversationsthatmotivatedthewritingofthispaper.Allthemistakesare,ofcourse,myexclusiveresponsibility.

1 AlthoughIwillusetheterm‘preference’morefrequently,Iwilltakepreferencesandutilitytoberoughlysynonymous,inlinewiththestandardterminologyofcontemporarychoicetheorists(autilityfunctionisanindexofpreferences).

2 Forahistoricalreconstructionofsomekeyaspectsoftheoldcontroversy,seeLewin(1996),BruniandSugden(2007),Moscati(2013a,2013b,2015).

3 AnincompletelistofcontributionstotherecentdebateincludesHausman(2000,2008,2012),Mongin(2000a),Dowding(2002),Glimcheretal(2005),Ross(2005,2011,2014),Camerer(2008),GulandPesendorfer(2008),

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ofcontentioniswhetherpreferencesandutilityshouldbegivenabehaviouralormentalinterpretation.Do

these theoretical constructs refer to overt behaviour, patterns of choice that are readily observable and

intersubjectively measurable? Or should we take them to describe psychological states, hidden in the

mindsofdecisionmakers?

These are generally assumed to be the only plausible interpretations. But the assumption is

dubious: inthenextfewpagesIwillmakeaproposalthatcutsacrossthebehavioural/mentaldichotomy

andtriestoreconciletheinterpretationofutilitywiththebestscientificpracticeineconomics.Iwillargue

that the two standard positions in this debate – ‘behaviourism’ and ‘mentalism’ – are to be rejected.

Preferences in the economic theory of choice are not mental states: they are dispositions that can be

realized in different ways depending on the circumstances of choice and on the characteristics of the

decision-maker.Iwillarguethatthisclaimdoesnotimplyacommitmenttoabehaviouristinterpretationof

preferences, however. On the contrary it is entirely compatible with the idea that psychology plays an

importantrole inchoicetheory.Butthisdoesnot implythatpreferencesorutilityaretobetransformed

intopsychologicalconstructs,inspiteofwhatsomeeconomistsadvocate(andothersdread).

Theargumentreliescruciallyonmultiplerealization,andonthe‘wide’applicabilityofchoicetheory

beyondthetraditionaldomainofhumandecisionmaking.Thisextensionrequiresthat‘preference’isgiven

anabstractinterpretation,alongthesamelinesasconceptslike‘force’inphysicsor‘fitness’inbiology.The

discoverythattherearedifferentkindsofforcespromptedthedevelopmentofdifferenttheoriessuchas

electromagnetism,thatnowcomplementthetraditionaltheoryofgravitation.Similarly,differenttheories

ofpreferencesoughttoexplainthepreferencesofdecisionunitswhoseinternalprocessesareunlikelyto

beexplicatedbytheprinciplesofhumanpsychology.

Thepaperisorganizedasfollows:sectiontwosummarizesclassicbehaviourismandexplainswhyit

isuntenable.Thissectionisrelativelyshortandunoriginal.ItwilloutlinewhatItaketobethefundamental

flawofbehaviourism,refertotherelevantliterature,andsavespaceforthediscussionofmentalisminthe

subsequent sections. Section three explains what role preferences play in economic explanations of

behaviour, in (broadly) dispositional terms. Section four shows that this interpretation is consistentwith

scientific practice in behavioural economics, focusing on the case of Prospect Theory. In section five I

illustrate how intransitive preferences can be multiply realized, using examples from human decision

makingandcommitteedeliberation.Sectionsixsummarizestheargumentandconcludesthemainbodyof

thepaper.Thelasttwosectionsareoptional,andwrittenmainlyforthesceptics.Sectionsevendefusesa

commonworry, namely that the proposed interpretation of preferencesmakes the economic theory of

choice void of any substantial content. Section eight criticizes the attempt to defendmentalism from a

functionalistperspective.

Hands(2009,2013,2014),Vromen(2010),Lehtinen(2011),Guala(2012),Fumagalli(2013),Clarke(2016),DietrichandList(2016),Okasha(2016),Angner(unpublished),Cozic(unpublished),NagatsuandPoder(unpublished).

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2.Background:whypreferencescannotbejustbehaviour

Theinterpretationofpreferencesandutilitythatbecameorthodoxinthemiddleofthetwentiethcentury

isadirectdescendantofphilosophical‘positivism’.Positivism,tobesure,tookvariousforms:whilebland

positivistsmerelystressedthe importanceofempiricalevidencefortheproductionofknowledge,radical

ones advocated the elimination of all scientific terms that are directly unobservable or irreducible to

observable concepts. In physics, for example, operationalists tried to reduce themeaning of theoretical

statementstothesetofactionsthatscientistsperformwhentheymeasureaparameterinthelaboratory

(e.g. Bridgman1927).An electron according to this interpretation is not a small particlewith a negative

electriccharge,butthesetofoperationsweperformwhenweobserve,say,tracksinabubblechamber.In

psychology, behaviourists aimed at re-interpreting every psychological concept in terms of measurable

behaviour(e.g.WatsonandMcDougall1929).Termslike‘hunger’or‘pain’,shouldbereplacedbylawsthat

connectexternalphysicalstimuli(likefooddeprivation)withovertbehaviour(likefoodseeking).

Similar ideas played a prominent role in choice theory, where positivistic-minded economists

attempted(1)toreplace‘psychophysical’utility(pleasure)withanindexofpreferences;and(2)toreduce

preferencestoobservedchoice(behaviour).Thefirstpartoftheprogrammewasaccomplishedbyvarious

theorists(notablyPareto1906,andHicksandAllen1934)overthecourseofthirtyyears,andhasbecomea

pillarofmodernmicroeconomics.Thesecondpart,incontrast,provedtobemoreproblematicrightfrom

the beginning, and led to ambiguities that still hamper contemporary discussions on the status of

preferencesandutility.

ThebestknownapplicationofbehaviourismineconomicsisPaulSamuelson’stheoryof‘revealed

preferences’(Samuelson1938,1948,1950).Samuelson’sworkwaspartlymotivatedbyhisdissatisfaction

withHicksandAllen’spreference theory. Samuelsonpresentedhisproposal asa ‘direct attackuponthe

problem,droppingoffthelastvestigesoftheutilityanalysis’(Samuelson1938:62).WhereasinHicksand

Allen’s approach the concept of preference is primitive, Samuelson took choice as primitive.He showed

that the standard analysis of consumer’s behaviour (Neoclassical demand theory) only requires a simple

restriction(the‘weak’axiomofrevealedpreferences)onagents’choices:‘ifanindividualselectsbatchone

overbatchtwo,hedoesnotatthesametimeselecttwooverone’(Samuelson1938:65).Samuelsonthus

aimed at obtaining, without even mentioning utility or preferences, the same results that had been

achievedearlierbyPareto,HicksandAllen.4

Revealedpreference theorywas refinedanddeveloped invariousdirectionsduring the following

twodecades,5andSamuelson’s frameworkhasbecomeastandard tool inadvancedeconomic textbooks

4Althoughthe‘behaviourist’interpretationofSamuelson’sprojectismajoritarian,ithasitscritics.Mongin(2000a)for

examplearguesthatSamuelsonneverintendedthetheoryofrevealedpreferencestoreplaceordinalutilityanalysis.Foradetaileddiscussionoftherelationshipbetweenrevealedpreferenceandordinalutilitytheory,seeCozic(unpublished).

5 Seee.g.Samuelson(1948),Houthakker(1950),Afriat(1967).Hands(2013)proposesausefultaxonomyof

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(e.g.Mas-Colelletal1995,Varian2005).Butinspiteofitsapparentsuccess,theoriginalpositivistproject

wasneverfullyachieved.Therearemanyreasonsforthis,6butthemostfundamentalonehastodowith

its narroworiginal scope: Samuelson’s revealedpreference approachwasmeant tobe a contribution to

ordinal utility theory, andhenceworkedwithin the domain of riskless decisions. The formalmapping of

preferencesontobehaviourwasattained inabelief-less context, inotherwords, taking forgranted that

consumershaveperfectinformationabouttheobjectsofchoice.Butifthelatterconditionisdropped,itis

easytodemonstratethattherecannotbeaone-to-onecorrespondencebetweenpreferenceandchoice.

Considerthefollowingtwocases:

(a)TonypreferstherestaurantPizzaVesuviotoPizzaBellaNapoli.HebelievesthatPizzaVesuviois

closedtonight.Therefore,hegoestoPizzaBellaNapoli.

(b)VincentpreferstherestaurantPizzaBellaNapolitoPizzaVesuvio.Hebelievesthatbothareopen.

Therefore,hegoestoPizzaBellaNapoli.

AlthoughTonyandVincent’schoicesareidentical,itwouldbeamistaketoconcludethatTonyand

Vincehavethesamepreferences.Thereasonisthat,inthestandardtheoryofeconomicchoice,behaviour

is determined both by preferences and by beliefs. As a consequence, the same choice (behaviour)may

resultfromdifferentpreferences,ifbeliefsalsodiffer.

Theproblemisubiquitous.TonymaydecidenottocontributetotheorganizationoftheChristmas

fairbecausehebelievesthatnooneelse intheneighbourhoodwillgiveanymoney,althoughheregrets

thatthefairwillnottakeplace.VinceincontrastdoesnotcontributebecausehehatesChristmasfairsand

wouldn’tcontributeevenifeveryoneelsedid.Bylookingattheirbehaviourwecannotdeterminewhether

thesituationthateachofthemisfacingisapublicgoodsgameornot,becausewedonotknowhowtheir

choicesdependontheirbeliefsaboutotherpeople’spreferencesandbeliefs.

Oneoption, of course, is to addbeliefs to the background conditions that allow themapping of

preferences onto choices. Such a move is eminently sensible and scientifically correct, but defies the

behaviourist goal: unless the beliefs are defined in behavioural terms, the revealed preference theorist

wouldmakeuseofthesortofpsychologicalconceptsthatsheintendedtoeliminateinthefirstplace.But

exactlythesameargumentholds,symmetrically,forbeliefs:itispossibletoderivebeliefsfrombehaviour

onlyifweknowthepreferencesofdecision-makers.Thebehaviourististrappedinamethodologicalcircle

thatdoesnothaveasatisfactorywayout.

ThispointhasbeenthoroughlymadebyAlexRosenberg (1993),DanHausman (2000,2012),and

others, so I will not devote much time to it here. Some economists have proposed sophisticated

interpretationsof choice theory thatattempt to circumvent theproblem in ingeniousways,butnoneof

differentversionsoftherevealedpreferenceproject.

6 ForacomprehensivereconstructionoftheevolutionofSamuelson’sposition,seeHands(2014).

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them is able to recover the behaviourist programme without betraying its original goal.7 Without

informationalinputabout‘primitive’variables(i.e.,variablesthataredefinedinnon-behaviouralterms),it

isimpossibletotheorizeincoreareasofeconomicssuchasdecisionandgametheory.

Analternativestrategyistoabandonradicalbehaviourismandendorseaweakerinterpretationof

revealedpreferencetheory.Thisweakerbutmorereasonableinterpretationofpreferenceshasalwaysco-

habited with the radical behaviourist one: instead of claiming that preferences are behaviour, many

economists take Samuelson to mean that preferences aremanifested in behaviour. The latter view is

implied by Samuelson’s choice of terminology,8 and is consistent with a moderate empiricist attitude:

although preferences and choices are different things, choice is the empirical evidence that economists

traditionallyusetotesthypothesesderivedfrombeliefs,desires,andoptionsets.9

But endorsing themoderate interpretation shifts the problem one step beyond.What is choice

behaviour evidence of? If preferences are not patterns of choice, then what are they? What is the

alternative to a behaviourist interpretation?Does rejecting behaviourism imply thatwe should accept a

‘mentalistic’interpretationofpreferences?

3.Explainingwithpreferences

Most contemporary economists do not care much about behaviourism. Contemporary supporters of

revealedpreference theory aremore interested in raisingbarriers against the intrusionof psychology in

economics,thaninrevivinganout-datedphilosophicalprogramme.10Mostofthemhoweverstartfroma

common–andseeminglyplausible–presumption,namely, that the failureofbehaviourismwouldopen

thedoorstomentalismineconomics.Themainthesisofthispaperisthatthisworryisunjustified:thereis

roomforathirdposition,accordingtowhichpreferencesareneitherbehaviouralnormental.

Iwillarguelaterthatthethirdpositionisconsistentwithbestscientificpractice.Itis,inparticular,

consistentwiththewayinwhichtheconceptsofpreferenceandutilityareusedinbehaviouraleconomics

–ascientificprogrammethatisentirelydevotedtopromotetheintegrationofpsychologywitheconomics.

Iwillarguethatalthoughbehaviouraleconomicshasundoubtedly introducedpsychologicalconceptsand

mechanismsineconomicscience,ithasgivennoreasontointerpretutilityorpreferencesasmentalstates.

Preferences,asweshallsee,areinterpretedinbehaviouraleconomicsprettymuchinthesamewayasin

7 SeeHausman(2000,2012),Hands(2013)fordiscussion. 8 TheterminologywasintroducedinSamuelson(1948).Theexpression‘revealedpreference’doesnotevenoccurin

Samuelson’sfirst(1938)article. 9 Thisdistinctionbetweenastrongandweakformofrevealedpreferencetheoryisnowfirmlyentrenchedinthe

literature:seee.g.Hausman(2000,2012),Hands(2013),DietrichandList(2016),and,forbehaviourismmoregenerally,alsoMoore(2001).

10 GulandPesendorfer(2009)aretypicalinthisrespect.Anotherconcernistopreservethe(alleged)value-neutralityofeconomicscience;ontheinterpretationofpreferencesandthenormative/positiveusesofchoicetheory,seee.g.Hausman(2012),Hands(2013,section4)andOkasha(2016).Sen(1982)istheprecursorofmostcontemporarydiscussionsontheuseofpreferencesinnormativeeconomics.

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traditional (rational) choice theory. As a preliminary step, therefore, it is necessary to explain how

preferencesaretypicallyusedbyeconomiststoexplainchoice.

Preferencesprovideinformationabouttherelativeattractivenessofdifferentstatesofaffairs.They

explain,forexample,whyTonyusuallydinesatPizzaVesuvioratherthanBellaNapoli(atVesuviotheysella

tastier, cheaperMargherita pizza), but also why he would change his habits if Vesuvio charged 5 extra

dollars for his favourite pizza. In general, preferences are explanatory relevant and help formulating

counterfactualclaimsaboutfutureorhypotheticalscenarios,whichmayinformthedecisionsofscientists

and policy-makers.11 At the same time, preference-based explanations are not trivial and competewith

alternativeexplanationsinthescientificarena.Tony’scocainehabitforexampleescapeschoice-theoretic

analysis,becauseitisinsensitivetovariationsinthecostsofconsumption.12

Evenwhentheyaregenuinelyexplanatory,however,preferencesdonotprovideinformationabout

manyinterestingquestions.Theydonottellus,forexample,how–throughwhichcausalmechanism– a

given price variationmay affect Tony’s behavioiur. They tell us that A (an agent) does B (engages in a

certainbehaviour)inC(asetofcircumstances),withoutsayinghowBandCarecausallyrelated.Adoptinga

venerableterminology,throughoutthepaperIwillassumethattosaythat‘AdoesBincircumstancesC’is

equivalenttosayingthatAhasadispositiontodoB.13Iwilltakethisasastipulativedefinition,ratherthan

an analysis of the everyday concept of ‘disposition’. The point is not to solve an ancient philosophical

disputeaboutadifficultmodalnotion,buttoborrowauseful terminologythathelpsarticulatethemain

features of preference-based explanations, and show that they share such featureswith other scientific

explanations.

The set of circumstances C is called the ‘trigger’ of B. For example, to say that crystals of NaCl

dissolveifyouputtheminwaterisequivalenttosaythatsaltissoluble,andwatertriggersthedissolution

ofsalt.Thankstomodernchemistryweknowquitealotaboutthisprocess:roughly,mixingNaClwithH2O

causesthedissociationofNaClintoions.Butknowledgeofdispositionsisinformativeandexplanatoryeven

ifwedonotknowthedetailsoftheunderlyingcausalprocesses.ThusifIsaythat‘thevaseisfragile’,Iam

suggestingthatweshouldhandleitwithcare.Butknowledgeofthecausalmechanismthatmayleadtothe

breakingofthevaseintolittlepiecesisnotnecessaryformanypragmaticpurposes.

Dispositionalviewsofpreferencesaretraditionallyassociatedwithbehaviourism.Thebehaviourist

is attracted to dispositions for epistemic reasons: because the causal basis is partly internal and

11 Onexplanatoryrelevanceandcounterfactualreasoningseee.g.Woodward(2008). 12Iamsimplifyinghere:strictlyspeakingthisistrueonlyifVince’sdemandcocaineiscompletelyinelastic,whichis

rarelytrueevenforharddrugaddicts(Hyman2009).Manycriticsoftraditionalchoicetheoryfocusoncasesthatareconceptuallyanalogoustothis:themaineffectofmoralnormsandcommitments,forexample(Sen1977),istomakespecificbehaviours(e.g.honestdealings)inelastictovariationsincostsandbenefits(e.g.bribes).Butagain,strictlyspeaking,suchcasesfalloutsidetherealmofchoicetheoryonlyincaseofcompleteinelasticity.

13 Idonotpretendtobeparticularlyoriginal:thereisanoldtraditioninphilosophy,goingbacktoGilbertRyle,thatidentifiesmentalstateswithdispositions.Sincepreferencesinchoicetheoryfulfilasimilarroleasdesiresinfolkpsychology,itisnotsurprisingtofinddispositionalaccountsofpreferencesinthecontemporaryliterature(e.g.Sugden1991:762;VanderbeekenandWeber2002;Dowding2002;Hausman2012;Cozic,unpublished).

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unobservable, thebehaviouristdespairs thatwewill everknowanythingabout it. If ‘AdoesB inC’only

refers to observable events or states, the epistemicworry disappears.Unfortunately, however,wehave

seen that the connection between choice and preferences in choice theory is mediated by beliefs.

Preferences are ‘belief-dependentdispositions’ (Hausman2012:33), that is, the sortofdispositions that

willnothelpthebehaviouristproject,becauseunobservablestatesareincludedinC.Toavoidconfusion,

philosopherstendtouseacompletelydifferentlabel–‘functionalism’–fortheideathatmentalstateslike

desiresaredefinedpartlyintermsofcausalrelationswithothermentalstates(e.g.Block1980).ButsinceI

intendtoarguethatpreferencesarenotmentalstates,Iwillavoidthatterminologyhere.14

When it is used to explain, a disposition typically brackets the causal basis that connects C (the

trigger)withB(thebehaviour).Inasingleformula:

C[+causalbasis]→B.

Bracketing the causal basis has advantages and limitations. Starting from the latter, it is obvious

thatdispositionsareunfittoanswercertainexplanatoryquestions.15AsMolièrepointedout,itisuselessto

say that opium has virtuus dormitiva, if the issue is why opium makes you sleep. When the question

concerns the details of the causal process, dispositions do not provide useful information. However,

dispositionalexplanationshavetheadvantagethattheyallowtoexpressgeneralizationswhenthecausal

basisismultiplyrealizable.

Acausalbasisismultiplyrealizablewhenacertaintypeofeventtriggersthesameeffectacrossa

rangeofcircumstances,eventhoughthecausalmechanismsdifferfromcasetocase.Sinceeconomistsare

usually interested in the explanation of aggregate phenomena, dispositional explanations spare us the

trouble of giving extremely complicated and heterogeneous descriptions of the causes of behaviour

(Dowding2002,Ross2005).Butmultiplerealizationmaybetroublesomeeveninthecaseofindividuals:for

example,supposethatTonyoncefeltsickaftereatingpepperonipizza.Sincethen,hehasrefusedtoeatit

in three separate occasions: the first time, Tony recalled the effects of food poisoning and decided

instinctivelynottoeatpepperonipizza,followinghisgutfeeling.Thesecondtime,Tony’sstomachdidnot

react pre-emptively, but Tony deliberated not to eat pepperoni pizza because he remembered the food

poisoning.Finally,by the thirdoccasion,Tonyhaddevelopeda routine toavoidpepperonipizzawithout

eventhinkingaboutit.Inspiteofthedifferentcausalmechanisms,inallthesecasesitiscorrecttosaythat

Tonyhasadisposition(apreference)fornoteatingpepperonipizza.

Inordertosupportscientificgeneralizations,dispositionsmusthavesomestablefeatures.Andin

factmostdebatesinbehaviouraleconomicsconcernthepropertiesthatpreferenceshave.So,eventhough

knowledgeofdispositionsdoesnotrequireknowledgeoftheircausalbasis,understandingthecausalbasis

14Iwillreturntofunctionalismandmentalisminthelastsectionofthispaper.15Foradetaileddiscussionseee.g.Mumford(1998,chapter6).

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mayhelptomodelthedispositionscorrectly.Themoreinformationwehaveaboutthecausalmechanisms

that connect C with B, the better we should be able to predict and explain the occurrence of B across

varioussituations.

Wecanthusdistinguishbetweentwoexplanatorytasks:atonelevel,economistsareinterestedin

providing explanations of behaviour; at another level,many (but not all) economists believe that giving

suchexplanationsrequiresthatwearealsoabletoexplainpreferences.Anotherwaytoputitistosaythat

preferences arepart of theexplanans (whatdoes theexplaining) at the former level, but constitute the

explananda(whatistobeexplained)atthelatter.Thuspreferencesexplainbehaviourinchoicetheory;but

psychologicalmechanismsexplainpreferencesinbehaviouraleconomics.Or,moreprecisely,psychological

mechanisms explainwhy certain preferences have the shape that they do have in themodels of choice

theory.

4.Forexample:ProspectTheory

The best way to illustrate the difference between explanations of behaviour and explanations of

preferences is to examine a specific model, and no model is better suited for this task than Prospect

Theory.ProspectTheorywasdevelopedbyDanielKahnemanandAmosTversky(1979;seealsoTversky&

Kahneman 1992) with the aim of systematizing a large body of experimental results produced by

psychologistsofdecision-makingduring the1960sand70s. The twomain featuresofProspect Theory–

whichdistinguishitfromtraditionalmodelsofrationalchoice–arethedistortionofsubjectiveprobabilities

(beliefs)andthereference-dependentutilityfunction.Sincepreferencesarethemaintopicofthispaper,I

willignorebeliefsandfocusonthelatteronly.

The classic shape of Kahneman and Tversky’s utility function is represented in Figure 1. The

intersectionofthehorizontalandverticalaxesdenotesthereferencepoint,thatis,thestateofaffairswith

respecttowhichtheagentevaluatesthepossibleoutcomesofherdecision. Inmanycasesthereference

point issimplythestatusquo.Thefirst importantideabehindProspectTheoryisthatthesameoutcome

maybeevaluateddifferentlybythesameindividualdependingonwhetheritisperceivedasagainoraloss

withrespecttothereferencepoint.Thesecondideaisthatutilitydecreasesinthedomainoflossesmore

steeplythanit increasesinthedomainofgains.The‘kink’ intheshapeoftheutilityfunctionreflectsthis

asymmetryintheevaluationofgainsandlosses.

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Figure1:Reference-dependentutilityinProspectTheory.

Notice that so far there is no reason to interpret thepreferences summarized in Kahnemanand

Tversky’s utility function as psychological states. Although at times they seem to differentiate their

languageonpurpose–theyspeakof‘valuefunctions’ insteadof‘utilityfunctions’,forexample–inmost

respectsKahnemanandTverskydotheirbesttopresentProspectTheoryinthesameformatastraditional

choicetheories.16All thepsychologicalcontent lies in theexperimentalphenomena– like lossaversion–

thatKahnemanandTverskyrelyupontojustifytheunorthodoxshapeoftheirutilityfunction.Butthisdoes

not imply that the functionmustbe interpretedpsychologically. ThepreferencesofProspectTheoryare

notdifferentfromthoseoftraditionalchoicetheory–theydescribebehaviouraldispositions.Theprincipal

differenceisthatProspectTheoryusespsychologicalinformationtoattainamoreaccuraterepresentation

of preferences, whereas traditional choice theory tends to sacrifice realism in favour of normative

considerations(theagentsofthetraditionaltheoryarerationaldecision-makers,firstandforemost).17

WhatisthecausalbasisofpreferencesaccordingtoProspectTheory?‘Lossaversion’or‘reference

dependence’refertoexperimentaleffects,ratherthancausalmechanisms.So it isnotclearwhatkindof

psychologicalprocesses liebehindProspectTheory.Although the theory itself is remarkably silentabout

this aspect, the cognitive science literature offers many useful suggestions. Reference dependence for

examplemaybeexplainedbythefactthatourcognitivesystemisessentiallyadetectorofnovelties.18New

eventsconveypotentiallyimportantinformationregardingopportunitiesandrisks,towhichourcognitive

apparatusmustoftenreactquickly.Onecheapanddirtywaytodoitistoassesstheirpositiveornegative

valencewith respect to the status quo, so as to determine promptlywhether changing one’s behaviour

wouldimproveorworsenone’ssituation.

Loss aversion – the fact that the utility function is steeper in the domain of losses – may be

16Theoriginalpaperincludedanappendixwitharepresentationtheorem,forexample.SeealsoWakker(2010)for

anattempttointegrateProspectTheoryinthetraditionalconceptualapparatusofeconomictheory.17 Ontheimportanceofnormativeprinciplesinchoicetheory,seeSugden(1991),Guala(2000),Starmer(2000),

Okasha(2016). 18 Seee.g.Tiitinenetal.(1994),CorbettaandShulman(2002).

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explainedby the fact that lossesandgainsareprocessed indifferentpartsof thebrain.19Losses tendto

triggernegativeemotionalreactions,andthe‘lossmodule’maybeover-sensitiveforevolutionaryreasons:

foracreaturelivinginadangerousenvironmentandalwaysonthebrinkofextinction,tryingtoavoidfatal

lossesismoresensible(infitnessterms)thanseekinguncertaingains.Apieceofevidenceinfavourofthis

hypothesis,forexample,isthatlossaversiongenerallyincreaseswhenthebudgetissmall(Camerer2005).

ProspectTheory,thus,isnotatheoryofpsychologicalpreferences–itisapsychologicaltheoryof

preferences.Anyre-interpretationofpreferencesinpsychologicalormentalterms–suchastherevivalof

hedonistic utility recently promoted by Kahneman and others (1997) – therefore must be based on

considerationsthatareindependentfromthosethatmotivatedthedevelopmentofProspectTheory.

5.Whenthecausalbasisvaries:intransitivepreferences

My rejection of the mentalistic interpretation of preferences is based on a distinction between two

different levels of explanation. And the distinction between the two levels is justified by multiple

realizability.Butmultiplerealizability isanempiricalmatter:whatifthecausalbasesofpreferenceswere

alwayspsychological,afterall?Tony’sdislikeofpepperonipizzawaspromptedinonecasebyanemotional

reaction,anothertimebydeliberatereasoning,andthethirdtimebyaningrainedhabitthat,presumably,

mustbeencodedinhisbrain.Inthiscase,theredoesnotseemtobeanyreasontodenythatpreferences

arepsychologicaldispositions.

Somecontemporaryattempts to identify ‘experiencedutility’or ‘utility in thebrain’areprobably

basedon this sortof reasoning.20 Ifnot in themind/brain,wherecouldutilitypossiblybe?Thequestion

seemsrhetorical ifwe interpretchoicetheorynarrowlyasa theoryofhumandecisionmaking,and ifwe

accept the internalist prejudice that pervades contemporary behavioural economics. But if these

assumptions are challenged,21 it is easy to see that (i) there may be different causal bases for the

preferencesofdifferentagents,and(ii)notallthebasesarenecessarilypsychological.

I will proceed again by way of an example. Experimental and behavioural economists have

demonstrated convincingly that preferences in some circumstances may be intransitive, and have

describedvariousmechanismsthatmayexplaintheseintransitivepatterns.Onemechanismwasidentified

a long time ago by Tversky and other choice theorists working on so-called ‘multi-attribute’ utility

functions.ImagineadecisionmakerfacingachoicebetweenthreeoptionslabelledX,Y,andZ.Eachoption

moreover is characterized by three attributes. The options and the attributesmay be anything that the

decision maker cares about, but to make the example more concrete let us suppose that the choice

concerns three typesof car characterisedbydifferentdegreesof comfort, speed, andprice.Now, letus

19 E.g.Blackfordetal.(2010) 20 Seee.g.Kahnemanetal.(1997),Glimcheretal.(2005),and–foracriticalperspective–Vromen(2010),Fumagalli

(2013). 21 Foraforcefulcritiqueofbothassumptions,seeRoss(2005).

11

supposethatthecars(X,Y,Z)arerankedoneachdimensionorcharacteristicasfollows:

1.Comfort:X>Y>Z

2.Speed:Z>X>Y

3.Price:Y>Z>X

The>symbolstandsfora(transitive)‘more…than’relation:forexample,alongthefirstdimension

carXismorecomfortablethanY,whichismorecomfortablethanZ.Now,sincenocarisbetterthanthe

others in all respects, the decision-maker faces the problem of weighing each characteristic and

aggregating the evaluations to form a single preference ranking. This task may be cognitively quite

demanding, so when presented with pairwise choices people tend to use a simple heuristic instead of

workingthroughtheaggregationprocedure.Theheuristicgoesasfollows:wheneveryouhavetomakea

decisionamongtwooptions,choosetheonethatbeatstheotheralongmostdimensions.Appliedtothis

particularcase,therulewouldgivethefollowingoutcomes:

XbeatsYincomfortandspeed,butlosesinprice.

YbeatsZincomfortandprice,butlosesinspeed.

ZbeatsXinspeedandprice,butlosesincomfort.

Using the simple heuristic thuswould generate intransitive preferences: X is preferred to Y, Y is

preferredtoZ,butZispreferredtoX.22

Themechanism behind preference formation, in this example, is clearly psychological: themain

reason to use the simple rule is to save cognitive effort. Each one of us can appreciate the lure of this

heuristicby introspection,andexperiments (e.g.Tversky1972)havedemonstrated thathumandecision-

makers have a tendency to engage in mono-dimensional evaluation before (or instead of) aggregating

across the attributes. A mentalistic interpretation of the causal basis of preferences in this case is

empiricallyandtheoreticallyjustified.

Itiseasyhowevertofindexamplesofintransitivepreferencesthatarenotbasedonapsychological

mechanismofthissort.Foreaseofcomparison, letusexamineacasethat is formallyverysimilartothe

previousone:auniversityhiringcommitteemustdecidehowtorankthreecandidates(DrSmith,DrBrown,

andDr Jones) for an academic position. The committee is constituted by threemembers,who rank the

candidatesasfollows:

1.Smith>Jones>Brown

22 Foraclassicexperimentalstudyofthisphenomenon,seeMay(1954).Otherexcellentdiscussionsofintransitivity

canbefoundinTversky(1969)andMongin(2000b).

12

2.Brown>Smith>Jones

3.Jones>Brown>Smith

Now, let us suppose that according to university rules the winner must be determined via a selection

processthatinvolvesasequenceofpairwisecomparisons,andthateachcomparisonmustberesolvedby

majorityvoting.Whenpresentedwithpairwiseoptions,thecommitteevotesasfollows:

SmithbeatsJones2-1

JonesbeatsBrown2-1

BrownbeatsSmith2-1

Thisisawell-knownexampleof‘Condorcetvoting’,aproblemthathasbeendiscussedextensivelyinchoice

theory.23 Condorcet voting is an interesting case of intransitivity generated by voting rules. A non-

psychologicalmechanismhereproducesanpeculiarpatternofpreferences.Althoughformallyanalogous,

themechanismthus is substantiallydifferent fromtheone thatexplains intransitivities inmulti-attribute

choice.The firstdifference is that thedecision-maker isanorganization rather thanan individualhuman

being.Thesecondoneisthatintransitivepreferencesaregeneratedbyaninstitutionalrule,ratherthanby

a heuristic.24 Any attempt to fix the problem, therefore, should better take this fact into account: the

committee does not suffer from bounded rationality, does not follow fast-and-frugal heuristics, and

transitivity cannot be restored by, say, changing theway inwhich the options are framed. An effective

interventionmusttargettheinstitutionalfeaturesoftheenvironment,forexampletherulesthatforcethe

committeetofollowamajority-votingprocedure.

Inthiskindofexternalistexplanation,thepreferencesofthecommitteearedeterminedtoalarge

extentbysomefeatureoftheenvironmentinwhichthecommitteemembershavetomakeadecision.The

causalbasisofpreferencesisnotalways,ornoteventypically,constitutedbypsychologicalprocesses.

6.Takingstock

The controversy on the interpretation of utility is one of the oldest debates in the foundations of

economics.Itsresilienceisduetoanunresolvedtensionbetween,ontheonehand,economists’aspiration

totheorizeatadifferentlevelfrompsychology,and,ontheother,thefactthatpsychologicalevidencehas

been an important source of information to build modern microeconomic theory. This has become

23 Seee.g.Farquharson(1969),ListandPettit(2011). 24 Thereare,ofcourse,psychologicalelementsinthecausalchainthatleadstothecommittee’spreferencestructure

(suchastheevaluationsoftheindividualcommitteemembers).Butsuchpsychologicalelementscannotexplaintheintransitivityofpreferences–not,atleast,withoutalotofhelpfromtheinstitutionalrules(seealsoRoss2005,2014).

13

particularlyevidentduring the last threedecades, since theriseofbehaviouraleconomicshas led to the

developmentofpsychologically-informedmodelsinmainstreameconomics.

Seeninthislight,theresistanceagainstmentalismmayseemallthemoreobsolete.Nonetheless,I

havearguedthatthenotionofpreferenceisusedinchoicetheory(includingbehaviouralchoicetheory)in

awaythatdoesnotcompelapsychologicalinterpretation.Thereasonisthatpreferencesaredispositional

termswithamultiplyrealizablecausalbasis.Becausetheyarebelief-dependentdispositions,behaviourism

fails.Butbecausetheyaremultiplyrealizable,mentalismdoesnothold.Insomecircumstances,especially

in the traditional domain of human decision-making, the causal basis is indeed mainly constituted by

psychologicalmechanisms.Butinothercasesitisnot.Thisexplainswhysomeeconomistsresistthenarrow

identificationofchoicetheorywiththepsychologyofdecision-making.

This is not an unscientific or a conservative position. Like ‘force’ in physics, ‘preference’ is an

abstract concept that must be filled with content in each specific domain of application. Like physical

forces,wehavegoodreasonstobelievethatpreferencesarerealexplanatoryvariables.Butwhattheyare,

exactly, issomethingthatscience–notphilosophy–will tell.Todiscoverhowmanykindsof forcethere

are,andhowtheywork,hasbeenan important task in thehistoryofphysics.Similarly, themechanisms

underlying preferences are potentially heterogeneous and new ones may be discovered with the

developmentofthisfieldofscience.

Thisbringsanendto themainargumentof thispaper.Withmultiple realizability, thecritiqueof

the behavioural/mental dichotomy is complete. Multiple realizability however presupposes a ‘wide’

interpretationofchoicetheory–asatheorythatisapplicabletothebehaviourofdecision-makersthatare

notnecessarilyhuman.Forthosewhodonotfindthispresuppositionpersuasive,therestofthepaper is

devotedtodispelafewworriesandobjections.InthenextsectionIaddressthefamiliarcomplaintthata

wide interpretation makes the theory of choice empty of explanatory content. In the final section, I

examinetheclaimthatbehavingconsistentlywiththeprinciplesofchoicetheoryisamarkofthemental–

andthusthatanyeconomicagentnecessarilyhasamind.

7.Firstcoda:thedomainofchoicetheory

There is no doubt that, historically, human decision-making has been the core domain of application of

microeconomics.Themodern theoryof rationalchoice isadirectdescendantofNeoclassicalconsumer’s

theory, and its extension to non-human behaviour is a relatively recent development. But today choice

theory can be and is routinely used to explain the behaviour of non-human animals, organizations, and

even artefacts. Onemayworry that these extensions of the theory compromise its explanatory power.

What is the purpose of attributing preferences and beliefs to robots, political parties, or fish? Political

partiesandrobotsmaybehave‘asif’theyhadpreferences,butsurelytheydonotreallywantanythingin

14

particular.Itisus,theobservers,whofinditusefultopostulatesuchtheoreticalconstructs;butthelatter

donotreallyrefertopreferencesinthegenuinesenseoftheterm.

Theproblemwiththisargument,ofcourse,isthatoneneedstoexplainwhat‘genuine’means.Ifby

‘genuine’ we mean a state generated by mental or psychological mechanisms such as those that are

implementedinhumanbrains,thencommitteesdonothavepreferencesinthissense.Butsincetheissue

thatwehavestarted from iswhetherpreferences (including thoseofhumandecision-makers) shouldbe

interpretedasmentalstates,clearlythisobjectionwouldbegthequestion.

Analternativewaytoproceedisthis:insteadofsearchingforhuman-likementalstates(whatever

theymaybe)innon-humandecision-makers,weshouldaskwhethertheattributionofpreferencestoany

(human or non-human) agent provides useful information about its behavioural dispositions. Are

preference-based explanations entirely ad hoc, or do they provide information that other kinds of

explanationfailtodeliver?Iftheywereadhoc,clearlythetheorywouldbevoidofsubstantialcontentand

oflittlescientificinterest.

But choice-theoretic explanations are not empty. They provide useful information about the

behaviour of creatures that are (1) consequence-driven, (2)motivated to pursuedifferent goals, and (3)

abletocomparethevalueofsuchgoals.25Anotherwaytoputitisthatchoicetheoryisvaluablyappliedto

creatures, artefacts, or organizations who possess a ‘control centre’ where information is processed,

consequences are evaluated, and trade-offs about costs and benefits aremade.How the control centre

works,orwhatitismadeof,isanissuethatmayinfluencewhichmodelofchoiceislikelytoworkbestin

eachspecificcase,butthatdoesnotprecludetheapplicationofchoicetheoryperse.26

Itmaybehelpfultoreviewafewcasesthatfalloutsidethedomainofthetheory,beginningwith

behaviour that is not consequence-driven (condition 1). When the doctor taps my knee with a little

hammer, my thigh muscle stretches and causes a jerk in the knee. Although the movement may be

described in choice-theoretic terms, such a descriptionwould bead hoc andwouldmischaracterize the

process. The knee-jerk reaction is a reflex: it does not result from a process of evaluation of the

consequencesofmyaction.

Multiplegoals(condition2):reflexbehaviourisnotalwayseasilydistinguishablefromothersimple

forms of decision-making. Russell’s famous chicken, who runs toward the feed until the day its neck is

wrung, isabletoevaluateonlyoneconsequenceof itsaction.Butempiricallytheredoesnotseemtobe

muchdifferencebetweenmono-consequentialistchoiceandreflexbehaviour:thechickeninaveryobvious

sense cannot help but run toward the farmer every time it sees him approaching, because it has been

programmed(orhaslearned)toevaluateonlythistinyaspectofthecomplexlifeofthefarm. 25ThereareclearanalogieswithRobbins’(1932)famousdefinitionofeconomicsas‘thesciencewhichstudieshuman

behaviourasarelationshipbetweenendsandscarcemeanswhichhavealternativeuses’:consequence-drivenbehaviourisbehaviourdirectedtowardends,andalternativeusesareanalogoustomultiplegoals.ForahistoricalperspectiveonRobbins’definition,seeBackhouseandMedema(2009).

26 Forasimilartakeontheimportanceofhavingacontrolcentre(or‘integratedworkspace’,inhisterminology)seeGodfrey-Smith(2013).

15

Weighing (condition3):a slightlymore intelligentanddiffidentcreaturewould take intoaccount

theprobabilitythatthefarmer isgoingtostring itsneck.Butthiswouldrequirethecapacitytocompare

differentoutcomes–suchasbeinghungryandbeingdead–togetherwiththeirrelativeprobabilities.The

choice-theoretic apparatus works best when we are dealing with a system that pursues different (and

potentiallyconflicting)goals,guidedbydifferentinformation.Thedecision-makermustbeabletoresolve

conflictsbetweenhergoalsbyweighingtheprosandconsofdifferentcoursesofaction.27

Most human behaviour does, of course, involve the evaluation ofmulti-attribute consequences.

Humans pursue a variety of goals simultaneously, and often face decisions that require the making of

trade-offs between different ‘goods’ and ‘bads’. A prominent humanway tomake such trade-offs is to

think about the consequences of the actions and to engage in a systematic process of comparative

evaluation. But conscious deliberation is by nomeans the only or themost important way tomake an

economicdecision.Whetherthecontrolcentreisinone’sbrain,one’scomputer,orinone’sstomachisof

secondaryimportance.28

That’swhythebehaviourofmanynon-humansystemscanbeexplainedinchoice-theoreticterms.

Weknowthatmiceandcrabshavepreferences–inthegenuinesenseoftheterm–becausewecanfind

their indifference points by varying costs and benefits and observing that their behaviour changes in a

systematicmanner. If laboratorymicearemadetowork toobtaindifferent typesofwater, forexample,

their behaviour fits a well-defined demand curve (Holm et al. 2007). If hermit crabs are given electric

shocks, theyaremore reluctant to leaveagood shell thanapoorqualityone (AppelandElwood2009).

Evenjellyfish,asweshallseeshortly,haveacontrolcentrethat“coordinatesrespondingwhenstimuliare

tendingtoelicitmorethanoneresponse”(Albert2001:474).

8.Secondcoda:functionalismandmentalism

Endorsing a wide interpretation of the domain of choice theory makes the multiple realizability thesis

plausible.Atthesametime,thewideinterpretationdoesnotmakethetheoryemptyortrivial.But,some

philosophersmay argue, a wide interpretationmay defeat the anti-behaviourist, anti-mentalist position

thatIamtryingtodefendinthispaper.Torealizewhyitmightbeso,itisusefultostartfromadistinction

betweentwofundamentalconceptionsofthemental:

It isnowacommonplace,at leastamongphilosophers, that therearetwofundamentallydifferent

conceptionsofmindandmentalstates.Oneisthatthemindisdistinguishedbyitsintrinsicnatureor

character:bywhatitisinitself.Itisdifferentfrommatterbecauseitismadeoutofdifferentstuff,as 27 Boththegoalsandtheweighingprocessesmustbestableenoughtoallowthepredictionofbehaviour.

28Seee.g.Zajonc(1980).Thosewhofailtoaccountforthemultiplecausalbasesofpreferencestypicallyendupdefendinganover-intellectualisedviewofpreferences.SeeforexampleHausman(2012),andAngner(unpublished)foracritique.

16

with Descartes’ res cogitans; or at least it has different intrinsic properties, such as being

phenomenallyconscious[…].

Theotherconceptionisthatmindisdistinguished,notbywhatitisintrinsicallybutbywhatitdoes

extrinsically:bytheroles itplays,thefunctions itdischarges.Onthisconception,tohaveamind is

simplytofunctioninacertainway.(ListandPettit2011:170-171)

Theconception thatmay threaten theanti-behaviouristandanti-mentalistposition is thesecond

one.Accordingtofunctionalists,

Mentalstatesare,at least inpart,statesthatplayacertainroleforanagent.Beliefs, forexample,

play the role of representing certain features of the world from the agent’s perspective, and

preferencesplaytheroleofmotivatingtheagent’sactions[…].Functionalism istheviewthatwhat

makes something amental state is simply that it plays the relevant role. (Dietrich and List 2016:

268)29

Thefunctionalistapproachisnotjustaphilosophicalcuriosity.Onthecontrary,itofteninformsthe

wayinwhichscientiststhinkandtalkaboutthemind.AccordingtoDavidAlbert,ascientistworkingatthe

Roscoe BayMarine Biology Laboratory in Vancouver, for example, some species of jellyfish display the

typical characteristics that we normally associate with the capacity to make choices. The behavioural

repertoireofMoonJellies(Aureliaorscyphozoa)

includeswimmingupinresponsetosomatosensorystimulation,swimmingdowninresponsetolow

salinity,diving inresponsetoturbulence,avoidingrockwalls, formingaggregations,andhorizontal

directional swimming. (…) The central nervous systemofAurelia sp. coordinatesmotor responses

with sensory feedback, maintains a response long after the eliciting stimulus has disappeared,

changes behaviour in response to sensory input from specialized receptors or from patterns of

sensoryinput,organizessomatosensoryinputinawaythatallowsstimulusinputfrommanypartsof

thebodytoelicitasimilarresponse,andcoordinatesrespondingwhenstimuliaretendingtoelicit

morethanoneresponse.(Albert2011:474)

Albert’sarticle is titled ‘What’son themindofa jellyfish?’. It suggests that themechanisms that

governtheresponsesofAureliatodifferentstimulijustifytheattributionofmentalstatestojellyfish.Butif 29DietrichandList(2016)donotendorsefunctionalism,butaweakerpositionaccordingtowhichplayinga

preference-roleismerelyindicative,ratherthanconstitutive,ofmentalstates.Themainreasonisthatmentalstatesmayhaveother,non-functionalcharacteristicsthatcanonlybeascertainedfromafirst-personalperspective.AstrongerfunctionalistpositionisdefendedbyListandPettit(2011),whotakeexclusivelyathird-personalperspectiveonthebehaviourofgroups.I’mgratefultoFranzDietrichandChristianListforclarifyingthispoint.

17

any creature that exhibits choice behaviour in this sense deserves to be attributed a mind, then every

preferenceisamentalstate–contrarytowhatIhavebeenarguingsofar.

Thisargumentisbasedonaprofoundequivocationofthesenseinwhich‘mentalism’isrelevantfor

economics.Asmentionedearlier,thedebateineconomicsconcernsmainlytherolethatpsychologicaldata

andpsychologicalexplanationshouldplayinchoicetheory.Itconcernsawayofdoingscience–ascientific

programme–ratherthanthephilosophicalproblemofdefiningthemental.Itisworthrememberingthat

functionalism originates from a scientific programme too, rather than from the need to resolve a

conceptualissue.Themaingoalofthisprogramme–‘ArtificialIntelligence’–wastounderstandcognition

by modelling the mind as a computational system. A cognitive system, according to this approach, is

essentiallyasoftwarethatcanbe implemented inmanydifferentways.Thehardwaredoesnotmatter–

therecanbemindsmadeofsiliconchips,vacuumtubes,orfleshandblood.As longas ‘something’plays

the right role in their control systems,non-humananimals, robots,plants,andalienscanbe legitimately

(scientifically)saidtohavementalstates.30

Farfrombeingmerelyterminological,thepointoffunctionalismwastoconvincephilosophersand

scientists that it is possible to understand complex cognition without ‘looking under the hood’. More

concretely,itpromisedtounderstandthemindevenwithoutanunderstandingofthewaythebrainworks.

Thesoftwarecanbestudiedindependentlyofitshardware.Thusfunctionalismwasmotivatedprimarilyby

amethodological,ratherthanbyanontologicalconcern.

Noticehowdifferentisthewayinwhichmentalismisemployedinthechoicetheorycontroversy.

Mentalistic interpretations of preferences have been brought to the fore by the rise of behavioural

economics.But themaingoalofbehavioural economistshasbeen topersuade social scientists that it is

importantto‘lookunderthehood’–thatis,tounderstandthepsychologicalandneuralbasisofeconomic

decision-making.Ifthereisamethodologicalcommitment,itisexactlytheoppositethanthefunctionalist’s

commitmentinAIandthephilosophyofmind.

Themainproblemwithafunctionalistdefenceofmentalismthenisthatitwouldbedisconnected

withanyspecificscientificprogramme. It isnotscientificallycontroversial thatsomethingdeterminesthe

choicesofaneconomicagent.Thescientificcontroversyconcernswhatthat‘thing’maybe,andaswehave

seen it is likelythat itdiffers fromcasetocase. Insomecase itmaybeaneuro-psychologicalprocess, in

another itmaybesomethingcompletelydifferent–aswhenwearedealingwithcommitteesor jellyfish.

Given thisdiversity, it seemsunlikely thata single scientific theorywillbeable toaccount for thecausal

basisofpreferencesacross thewholedomainofapplicationof choice theory. This isoneof the reasons

whyeconomistsprefertobenon-committalaboutthenatureofpreferences.Afunctionalisticmentalism

mayappealtophilosophers,butdoesnotmatchscientificpractice.

Anotherwaytoputitistosaythatthereisno‘scienceofthemental’inthefunctionalistsense.Or

rather:theonlyscienceofthementalwouldbechoicetheory.Butthentosaythatpreferencesaremental 30 Seee.g.theessaysonthemind-bodyproblemcollectedinPutnam(1975).

18

would be akin to saying that preferences are preferences – it would not make any difference in any

substantial,methodologicalsense.Behaviouraleconomicsincontrastisascientificprogrammecommitted

tostudythepropertiesandthecausesofhumanpreferences(amongotherthings).Itiscommittedtothe

claimthatsomepreferences (thoseofhumandecisionmakers)havecertainspecific features invirtueof

theunderlyingpsychologicalprocessesthatgovernchoicebehaviour.This isasubstantialhypothesisthat

makes a difference for the way in which economic science is and will be practised. Unfortunately, the

explanations that behavioural economics puts forward are unlikely to be applicable to jellyfish or

committees.Indifferentdomainsdifferentscientifictheoriesarelikelytoberelevant.Butthisissomething

thatascientificaccountofpreferencesmustbereadytocopewith.

When economists argue about ‘mindless’ or ‘mindful’ economics, in contrast, something very

important is at stake. The disagreement revolves around the use of psychology in economics. It has

important implications regarding the training of young economists, the theories and the methods they

shouldbe taught,andwhichoneswillhelpusmakeprogress in themodellingandexplanationofchoice

behaviour.

Economists do not argue about preferences as ‘mental state’ in the functionalist sense. This is

somethingaboutwhichthereisnodisagreement,becauseitdoesnotmakeanydifferenceforthewayin

whicheconomicscienceisdone.

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