Has anyone studied how people's indifference curves can change?

Question

I'm wondering if anyone has looked at how people's indifference curves can change, whether systematically due to experimental manipulations, or if they just vary due to noise.

I thought about this because of a study I did in which I got violations of transitivity when we generate two options from one indifference curve. For example, let's assume we have these three choices

A[25,50]
B[50,25]
C[45,30]

and a participant is indifferent to the choice sets {A,B} and {B,C}. However, when we present the choices {A,C}, they end up preferring A over C. By indifference curves we mean the line in a 2-dimensional attribute space where any two options are equally preferable. Possibly any study that has looked at violations of transitivity from choices generated from a single indifference curve can address this, but I haven't found anything like that yet.

I think maybe the reason I haven't found anything is that I'm mostly only familiar with the literature in psychology, whereas this seems like an issue what would have been investigated in economics. That is why I am asking about it here.

Answer 1

One important thing to remember is that people don't necessarily "have indifference curves". More correctly, indifference curves are a tool used in economic literature to model human rationale and decision making.

Transitivity is one very common assumption regarding utility functions, and it lays on a fairly reasonable explanation, which basically assumes people are "smart enough to do the math" and figure out that if they prefer A to B and B to C, then they should also prefer A to C.

So really what you're saying is that in your experiment, you found evidence that this doesn't model human behavior all that well. It's a perfectly reasonable claim, and if you think of it, such things make sense - since economic models are, almost by definition, a huge simplification of reality. Trying to adjust the models to better fit observed human behavior is one of the things that drives the field forward.

It turns out that the issue you brought up - whether people actually display this "transitivity" quality - is a pretty fundamental issue and has been studied quite intensively do date, in different scenarios.

To read more about it and get to know the work of people who previously challenged this assumption, try to look up "Transitivity of Preferences". This is one example of such paper which should get you into the subject:

Any claim of empirical violations of transitivity by individual decision makers requires evidence beyond a reasonable doubt. We discuss why unambiguous evidence is currently lacking and how to clarify the issue

Good Luck!