The Historical Development of Hierarchical Behavior in Economic Thought

One of the basic ideas underlying the established conception of rational behavior is the unlimited substitutability of preferences. Economic agents are assumed to compare and reduce everything to a common denominator: utility. The most obvious example of such preferences can be found in standard con...

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Bibliographic Details
Published in:Journal of the history of economic thought 2004-09, Vol.26 (3), p.363-378
Main Authors: Drakopoulos, S. A., Karayiannis, A. D.
Format: Article
Language:English
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Summary:One of the basic ideas underlying the established conception of rational behavior is the unlimited substitutability of preferences. Economic agents are assumed to compare and reduce everything to a common denominator: utility. The most obvious example of such preferences can be found in standard consumer theory where complete substitutability of every good is assumed in the sense that a loss of some units of one bundle can always be compensated by gain of some units of another commodity (such preferences are sometimes called Archimedian—see Borch 1968). This conception of preferences has a long history in economic thought and forms the basis of the standard rational choice theory (Hicks and Allen 1934, Samuelson 1938, Hicks 1946, Houthakker 1950).
ISSN:1053-8372
1469-9656
DOI:10.1080/1042771042000263849