ABSTRACT
The standard economic model of individual choice assumes that individuals have stable and consistent, well-defined and time-invariant preferences. Individuals are expected to rationally maximize those preferences. It is further assumed that the individual applies these preferences to final outcomes (but not to changes), maximizes expected utility, applies exponential discounting to future outcomes, and in general is capable of rational choice behaviour in accordance with a number of normative decision-making rules (axioms). These rules include the perfect definition of a problem and knowledge of all alternatives, the identification of all relevant criteria and their accurate weighting, an accurate assessment of all alternatives, and finally, the accurate computation and choice of the alternative with the highest expected value (Friedman, 1957; Rabin, 2002).
