Modelling imprecise preferences and identifying the implications for theory and policy

In order to understand the way the economy behaves we need a good understanding of how individuals make decisions: how they weigh different goods and services against their costs, how they judge risks, how they balance present and future considerations. Traditional economic models portray people as behaving according to highly articulated rational preferences. But these models lack psychological insight and behavioural realism and often fail to provide good descriptions or predictions. This research aims to develop more realistic decision models which take partial and imprecise preferences as a starting point. It will run experiments to discover more about the nature and variability of people's preferences. Better models of 'boundedly rational' consumers may improve our understanding of why and how markets fail and how to organise them more effectively. The project will also investigate how to collect more useful and reliable data from members of the public about their preferences for health care, safety improvements and environment benefits. Surveys based on conventional assumptions have often generated anomalies and inconsistencies as judged by the usual standards. A different modelling strategy may improve survey instruments and help produce data that are more appropriate and robust for public policy purposes