Unknown preferences

The problem with preferences

A cynic, Oscar Wilde wrote in his play Lady Windermere’s Fan, is “a man knows the price of everything, and the value of nothing”. This suggests that price and value are two different concepts, which apparently corresponds well with what we see around us. We generally don’t pay our hosts when we’re invited to a dinner party, but we take a gift. Neither the cost of the ingredients nor the price of the gift are particularly material here. We normally don’t ask friends to contribute to the cost of running our car when give them a lift. Behavioural economics too seems to fit this perspective. ….[READ]