The utility of the tenth spoonful of a scoop of ice cream is not the same as that of the first. Nor is it the same as the expected value of its proportion of the intact scoop prior to tasting a spoonful of it. Nor is the utility of the tenth spoonful of that scoop of ice cream the same as the utility of the calories contained in that single spoonful. In developing ideas about the expected utility and experienced utility of economic goods we must begin to understand the "nano-economics" behind decision-making. I propose that Theoretical and Behavioral Economists consider the conscious mind (and potentially the cognitive mind) a market for information about utility in which the ideas that out-compete other ideas contribute to the value of expected utility as well as experienced utility. In doing so, we can better design empirical experiments that help to discover how individuals go about determining the relevant vectors of utility in an economic good and determine how those vectors contribute to their decisions and choices. I propose that Vector Enmeshment and Vector Culling are critical judgment heuristics and are currently unresearched aspects of the consumer decision-making process. I propose here a model of Vector Analysis as a function of rational decision making. The use of Vector Culling and Vector Enmeshment as a means of generating a convex set with a clear optimum, and propose Vector Confusion (points of non-monotonicity) as triggers for additional search cost (the search for enmeshed Vectors to be separated via Vector Analysis) or as a trigger for enmeshment (collapse of several functions or vectors into a single Vector of Utility).
It should be clear that people take on the risk of transactions based on their perceptions of the risk in the transaction. A well-known brand, consistent quality of service, the wealth-identity of the individual and other memory-based ideas contribute to the perception of risk, and, therefore, the assessment of expected utility to the individual, for any transaction. But what may not be as clear is that individuals also use cognitive judgment techniques (analytical thinking and heuristics) to parse the perceived vectors of utility for a single good, and then weight the expected utility from each vector, in order to determine their expected utility for the whole good. Moreover, they analyze the good as a whole, in a particular context, to parse and analyze what they perceive are relevant vectors of utility upon which to place weights or other judgments of utility. In the classic "buying a car" experiment, the subjects are supplied with many features of various cars (utility vectors), as well as characteristics of the buying entity (the constraints), and are asked to determine which car is the best choice. The subject can make a judgment about (place an explicit or implicit weight on) each of those vectors in order to determine which version of "car" is the best choice. We even know that some of the vectors of utility include intangibles such as the perception of what the car contributes to the individual's personal identity.
It is my contention that by looking more carefully at how an individual parses a single economic good into utility vectors without guidance would be a valuable process. If we can gain better insights into how individuals pursue their goal of the maximization of utility, including, but not limited to, how they analyze their subordinate goals, what constitutes the maximization of utility for each of those, and what constraints do individuals perceive in pursuing maximization with respect to each decision on each element of utility, we may find new ways in which individuals are similar to one another and different from one another, and also which nudges or prompts are effective in helping people make objectively or subjectively better choices consciously.
Looking more carefully at the classic decision-making allegory of the Omelette-making partners, we understand this simple problem as one of assessments of expected utilities over the following options: 1) 6 ruined eggs, 2) a 6-egg omelet, 3) a dirty bowl that must be washed and a 5-egg omelet, and, 4) a 6-egg omelet and a dirty bowl that must be washed. In order to reduce the number of possible outcomes to these four, economists invoke the ceteris paribus rule, which eliminates the consideration of leaving the bowl unwashed, going to ask the omelet-making partner whether there was a reason for excluding the last egg, and other creative options are eliminated in one fell swoop. Ceteris paribus, along with the assumption that the individual always acts to maximize their own utility, makes for great simplicity but lacks the complexity and nuanced of judgment calls in real-world situations, even those as simple as the Omelet Conundrum.
I propose that individuals are, in fact, far more creative than they are given credit for in even the most simple decision-making processes and I suggest that it would make sense to perform research with open-ended questionnaires the likes of which would give subjects a very simple situation such as the omelet task and ask, "How would you go about making this decision?", "What other factors might you consider in order to make this decision?", and "Why did you make this decision?". Questions such as these would give insight into how individuals go about determining the vectors of utility, and researchers might be able to find differences and similarities among groups which would enable economists to discover types, if they exist, and give insight into how, when, and for what aspects of the task critical thinking and conscious analysis come into play, versus more intuitive feelings-based decisionmaking.
Questions like these added after the same initial set would give an indication of whether and what types of people tended to automatically (heuristically) think of their decisions in a cooperative game context (consider the utility of the partner in their decision) versus tending to consider it a unilateral decision. Sets of answers to various questions with varied scenarios such as job advancement games, moral hazard situations, and contracts could be analyzed for similarities, differences, and for suggestibility and learning.
It is time to dig deeper into the interworkings of decision-making and begin to understand whether people tend to lump vectors of utility together into "cupcake versus salad" or whether people tend to parse utility of objectively single goods into vectors such as taste, price, calories, effects on their long-run appearance, what else they've eaten that day, whether they are in need of comfort through food at that moment or not, whether they or someone else will wash the plate... If we are going to use Bernheim and Rangel's preference relation and John Von Neuman's axioms of rationality then it behooves us to understand more clearly what vectors are being analyzed for preference over, and how they arrived at them rather than assuming away these nuances of decision-making.
A delicious and aesthetically pleasing cupcake is the emergent result of beaten eggs, sifted flour, measured shortening and sugar, the loving care of a baker's hand (or the speed and uniformity of technologically advanced machinery), and the energy used in an oven. Different people care about different elements in the creation of that result. I believe that Vector Analysis, and more importantly, Vector Enmeshment (Flour plus sugar, etc. = "Cupcake" = Yummy) and Vector Culling ("My weight's fine right now.") are utilized to achieve a convex set of constraints that generate an unambiguously optimal solution at a point of decision and, that Vector Enmeshment and Vector Culling may be fundamental means by which consumers arrive at decisions.
The right types of experiments should help us understand if Utility Vector Analysis is occurring and whether Vector Enmeshment and Vector Culling are occurring and how they assist or detract from the goal of Utility Maximization via preferenced-based decision-making. Additional implications are that the perceived relevant Vectors of Utility are possibly competing constraints of the maximization problem, and the weights that individuals place on these vectors, then, may correspond to which Vectors "win" in the market of the mind.
