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Preferences, Goals, and Implications for Paternalism

Author

Listed:
  • Petr Krautwurm
  • Philipp C. Wichardt
  • Philipp Christoph Wichardt

Abstract

This paper proposes a conceptual model of decision-making tying specific preferences to broader individual goals. In particular, the model considers two hierarchically ordered types of goals: Terminal goals, which represent fundamental objectives (e.g., health, social connection, etc.), and instrumental goals, which serve as complexity-reducing intermediate steps towards achieving terminal goals (e.g., healthy eating, meeting people, etc.) and which are used to derive eventual preferences (e.g., salad instead of cake, sports club instead of reading, etc.). Notably, originating from the simplification of a complex optimization problem, the hierarchical goal structure allows for contextual misalignments between different instrumental goals (directed towards different terminal goals). As a consequence, in some contexts, it may lead agents to make suboptimal decisions – as evaluated from an outside perspective. Thus, applied to the discussion about paternalism and nudging, the model is compatible with arguments in favor of external interventions as it assumes agents to be boundedly rational, which can be addressed, instead of having generally inconsistent preferences, which are hard to rank without further assumptions on the agency of decision makers. In that sense, the model provides methodological justification for (some aspects of) paternalistic interventions.

Suggested Citation

  • Petr Krautwurm & Philipp C. Wichardt & Philipp Christoph Wichardt, 2025. "Preferences, Goals, and Implications for Paternalism," CESifo Working Paper Series 11672, CESifo.
  • Handle: RePEc:ces:ceswps:_11672
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp11672.pdf
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    References listed on IDEAS

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    4. Bergh, Andreas & Wichardt, Philipp C., 2018. "Accounting for context: Separating monetary and (uncertain) social incentives," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 72(C), pages 61-66.
    5. Xavier Giné & Dean Karlan & Jonathan Zinman, 2010. "Put Your Money Where Your Butt Is: A Commitment Contract for Smoking Cessation," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 213-235, October.
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    8. Beshears, John & Choi, James J. & Laibson, David & Madrian, Brigitte C., 2008. "How are preferences revealed?," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1787-1794, August.
    9. Tversky, Amos & Kahneman, Daniel, 1986. "Rational Choice and the Framing of Decisions," The Journal of Business, University of Chicago Press, vol. 59(4), pages 251-278, October.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    preferences; goals; paternalism; behavioural inconsistencies;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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