Implicit Preferences

Category: Applied Microeconomics and Organization Seminar
When: 23 November 2022
, 14:15
 - 15:30
Where: RuW 4.201

Title: Implicit Preferences

Abstract: We show how simple decisions can, by themselves, reveal two layers of preference. Consider a hiring manager who always chooses a woman over a man with the same qualifications, but always chooses the man if their qualifications differ. Intuitively, these intransitive choices reveal an explicit preference for women, but an preference for men. More generally, we define an implicit preference for an attribute as one whose influence increases the more the attribute is mixed with other attributes (“dilution”). We show that implicit preferences arise under a diverse set of psychological foundations: rule-based decision-making, signaling motives, and implicit associations. We prove a representation theorem for the model and show how implicit preferences can be identified from binary choices or from joint evaluation data. We apply the model to two published datasets, finding evidence for implicit risk preferences, implicit selfishness, and implicit discrimination.