One of the great frustrations of daily life, not to mention neoclassical economics, is nontransitive preferences. Huh? In English, transitive preferences would mean that if B is better than A, and if C is better than B, then C must be better than A. But in daily life—when dealing with children or coworkers, for example—we often encounter people with nontransitive preferences: those who make these comparisons, then defiantly defend A.
In these frustrating situations, we have a choice. We can either become neoclassical economists and assume that these people and their silly preferences don’t exist. Poof! There go our kids. Or we can acknowledge their existence and figure out how to deal with them. Although the former may be better for economic analysis, I believe the latter will make life more negotiable.
Parents, how often have you had a conversation like this? “Billy, do you want to go to the pool or the park?” “The pool!” “Ok, or we could go to the beach?” “Yeah, the beach!” Then, halfway to the beach, “Can we go the park?”
At work, how often have you heard something like this? “Our widget project is much more promising than our lepton project. But our quark project is much more promising than our widget project.” Then, in a memo two weeks later, we’re going with the lepton project!
Does this mean that people are irrational? From my perspective, that’s not a very helpful question. More helpful is to ask why it happens, which also suggests what you can do. Here are five common reasons for non-transitivity, along with some suggestions about how to respond:
- They are confused: Sometimes their non-transitive preferences simply reflect their confusion. Perhaps they didn’t understand which playground you meant, or got lost somewhere else on the logic train. In this case, it might help to review all of the options before deciding (or deciding again) and/or ask them to make one decision between all three options.
- They are trying to confuse you: Sometimes, they understand their own preferences perfectly well but think they can lose you along the logic train. Perhaps they were trying to pacify you in the meeting but thought you’d forget their statements by the time the memo came out. In this case, you may want to document everything carefully as the conversation unfolds.
- You are confused: If we’re accusing others of confusion or malevolence, it’s only fair to admit that we can sometimes get confused too. Maybe Billy wanted to go to the park all along, but we were distracted by an interesting blog post on non-transitive preferences when he originally expressed that preference. In this case, you may want to repeat the process.
- They are conflicted or their preferences are changing: Non-transitive preferences don’t have to reflect confusion or malevolence; they could also reflect shifting preferences. Maybe the quark project was our priority during the meeting, but then new information on the market for leptons came to light. In this case, all you can do is roll with the punches.
- The options are incomparable: Similarly, sometimes the options are apples and oranges (and lemons). They are incomparable, so any comparisons between them are inherently unstable. Maybe going to the park is such a different experience than going to the beach that Billy’s opinion is bound to change depending on what he’s thinking at the moment. In that case, you and Billy should probably consider the independent merits of each option rather than comparing them to each other.
Non-transitive preferences can be infuriating—to parents, in organizations, and for economists. But, by acknowledging their existence and developing a plan to deal with them, we can make life at least a little more negotiable—if not a little more neoclassical.