Economics and psychology offer contrasting perspectives on the question of how
people value things. The economic model of choice is concerned with a rational
agent whose preferences obey a tight web of logical rules, formalized in consumer
theory and in models of decision making under risk. The tradition of psychology, in
contrast, is not congenial to the idea that a logic of rational choice can serve
double duty as a model of actual decision behavior. Much behavioral research has
been devoted to illustrations of choices that violate the logic of the economic
model. The implied claim is that people do not have preferences, in the sense in
which that term is used in economic theory Fischhoff, 1991; Slovic, 1995; Payne,
Bettman and Johnson, 1992.. It is therefore fair to ask: if people do not have
economic preferences, what do they have instead? Does psychology provide theoretical
notions that can account, at least in some contexts, both for apparent
violations of the rational model of preference and for the regularities of observed