Freedom to Choose and Choice X-Inefficiencies: Human and Consumer Rights, and Positive and Normative Implications of Choice Behavior

In contrast of the conventional perspective, a model of preference formation is developed of rational or intelligent utility maximizing agents wherein they can possess preferences that are objectively suboptimal from both an individual and social perspective. In addition, the revealed preferences of agents might be optimal from the perspective of the individual agent, but might conflict with the preferences of other agents. With optimal but heterogeneous preferences, based on issues of gender or class, for example, moral and political dilemmas might arise with respect to resolving such optimal but conflicting preferences. Thus, the revealed preferences of agents cannot be deemed, necessarily, as an indicator of what is in the best interest of the agent and of society at large. For optimal preferences to be constructed and chosen requires an appropriate institutional setting. Moreover, the extent to which preferences are optimal affects the relative efficiency of the economy. Understanding how optimal preferences are constructed and realized is thus critically important from an analytical and from both an individual and social welfare perspective.