14 H. Hayakawa J. of Economic Behavior Org. 43 2000 1–34
different values to human activities, and individuals’ orderings of wants are likely to reflect such social and cultural differences.
Third, the fact that social want is placed at the end of an ordering does not imply that social considerations are of the least importance when one’s budgetary resources are too
limited to satisfy many of the basic needs. Even in such situations, multiple means are likely to be available, and this multiplicity often calls for social considerations for further
guidance. This may account that even in a less affluent society, where individuals are still struggling for the basic needs, social pressures for conformity can coerce individuals to
choose, among many alternatives, those that invite less social sanctions. In an affluent society on which our attention is focused, most of the primary needs are satisfied and social
considerations occupy the mind of most individuals as they seek constantly higher social status identification. In such a society, social considerations do play a crucial role as an
instrument of indeterminacy reduction on the choice set. It is this fact that supports our assumption that the satisficing feasibility set i.e., the set of those choice objects that are
feasible and meet all of the physical needs to their aspiration levels is non-empty.
5. Sequential satisficing of wants
Sequential satisficing of wants reviewed above is based on three premises: 1 All wants, physical or social, are prioritized, and social want appears at the end of this ordering. 2 Each
physical want is bounded by its aspiration level whereas no such bound is imposed a priori on social want because this want is determined by social norms. 3 It is social interdependence
via reference groups embedded in a cultural value orientation that structures social want such that it serves as an instrument of indeterminacy reduction in choice decision making.
In the sequel, we derive an ordering of choice objects from the prioritization of differing wants and show that behavior based thereon is perfectly rational. As a matter of our strategy,
we first deal with prioritization of physical wants and get an ensuing ordering of choice objects, which is incomplete to the extent that the satisficing feasibility set is non-empty. We
then combine this ordering with another ordering based solely on social want considerations. We show that this composite ordering is well defined and that the resulting choice behavior
is rationalizable.
Suppose, we have a fixed number of physical wants. Let want i be denoted by w
i
and the property that satisfies want i by x
i
. A greater value of w
i
and x
i
indicates, respectively, a greater degree of satisfaction of want i and a greater capacity to satisfy want i. We start
with the following postulates:
Postulate 1. An individual has a finite number, say m, of physical functional wants, denoted w
1
, w
2
, . . . , w
m
. Let W ≡ {w
1
, w
2
, . . . , w
m
}. W is individual-specific.
Postulate 2. An individual has a strong ordering R
w
on the set W, i.e., R
w
satisfies: 1. Transitivity: w
i
R
w
w
j
and w
j
R
w
w
k
imply w
i
R
w
w
k
for any w
i
, w
j
, and w
k
in W. 2. Asymmetry: w
i
R
w
w
j
implies not w
j
R
w
w
i
for any w
i
and w
j
in W. 3. Completeness: Either w
i
R
w
w
j
or w
j
R
w
w
i
holds for any w
i
and w
j
in W.
H. Hayakawa J. of Economic Behavior Org. 43 2000 1–34 15
Postulate 3. Each want, w
i
, has its aspiration or relative satiation level, denoted w
i ∗
. This is equivalent to assuming that the corresponding want-satisfying property or quality
x
i
has its aspiration level x
i ∗
. Postulate 2 implies that any subset of W has a unique maximal element. Postulate 3 implies
satisficing, i.e., that physical wants are only satisfied to their relative satiation levels. These postulates give a sequential satisficing decision rule: an individual first prioritizes physical
wants, and satisfies them sequentially, each to its aspiration level. Without loss of generality, let the elements of set W be arranged according to the priority ordering, so that w
i
R
w
w
j
holds if and only if ij. The space of goods is the non-negative orthant of an n-dimensional Euclidean space,
denoted G = {y : y ∈ R
n
and y ≥ 0}, and the space of the want-satisfying properties qualities is the non-negative orthant of an
m-dimensional Euclidean space, denoted X = {x : x ∈ R
m
and x ≥ 0}. Assume that there is a perceived, hence basically subjective transformation function Φ :
G → X, which reflects the amount of information that an individual possesses, his cognitive limitations, and the way he perceives the merits of choice objects. Since information and
cognition are not free, the perceived transformation reflects the cost of both information gathering and cognition. Given such a transformation function, a commodity bundle y
i
is transformed to a bundle of physical want-satisfying properties:
x
i
≡ x
i 1
, x
i 2
, . . . , x
i m
= Φy
i
≡ [Φ
1
y
i
, Φ
2
y
i
, . . . , Φ
m
y
i
], where Φ
j
y
i
is the jth component of Φy
i
. Let the vector of the aspiration levels of m want-satisfying properties be
x
∗
≡ x
1 ∗
, x
2 ∗
, . . . , x
m ∗
. The transformation function Φ : G → X induces an ordering of objects in G, which we
call a preference relation. This relation is more general than the usual one that underlies the traditional utility theory for the reason that it is affected, among other things, by the
aspiration levels, experiences, and information in possession, which are not independent of social and psychological predispositions of the decision maker, the cost of cognition, and
the cost of information gathering and processing.
Postulate 4. An individual has a preference relation ≻ on the space of goods G, which is defined as follows: for any two commodity bundles, y
i
and y
j
, in G, y
i
≻ y
j
if and only if any one of the following conditions holds:
1. x
j 1
x
1 ∗
and x
i 1
x
j 1
. 2. x
i 1
= x
j 1
x
1 ∗
, x
j 2
x
2 ∗
, and x
i 2
x
j 2
. 3. x
i 1
x
1 ∗
, x
j 1
x
1 ∗
, x
j 2
x
2 ∗
, and x
i 2
x
j 2
and so on up to the mth want-satisfying property, where x
i
≡ x
i 1
, x
i 2
, . . . , x
i m
= Φy
i
and x
j
≡ x
j 1
, x
j 2
, . . . , x
j m
= Φy
j
.
16 H. Hayakawa J. of Economic Behavior Org. 43 2000 1–34
In determining preferences between any given two commodity bundles, y
i
and y
j
, an individual first examines the extent to which they satisfy the want of the first priority. If the
two bundles satisfy this want either to the same extent or in excess of its aspiration level, then his attention shifts to the want of the second priority. This will be repeated sequentially.
A preference relation of this kind is in general not complete for the following reason: to be able to state that either y
i
≻ y
j
or y
j
≻ y
i
holds for any two alternatives, one needs some decisive relation at the margin. But, after all preceding ones have failed to make preferences
determinate one way or the other, even the last the mth property may still fail to do so because this property is again satisfied either to the same extent or in excess of its aspiration
level. It is this incompleteness or the indeterminacy that, in our view, motivates individuals to seek further guidance in social and cultural norms, which will be discussed in detail in
the next section.
The space of goods, G, together with this preference relation, constitutes a relational system denoted G, ≻. Because ≻ is asymmetric and negatively transitive i.e., not y
i
≻ y
j
and not y
j
≻ y
k
imply not y
i
≻ y
k
, this is a weak order system. Also, given ≻ on G, an indifference relation, denoted ∼, can be defined by the absence of preferences one way
or the other. That is, for any two bundles, y
i
and y
j
, in G, y
i
∼ y
j
y
i
is indifferent to y
j
if and only if neither one is preferred to the other. Then, combining ≻ with ∼, we may form
a composite relation R
G
, on G, defined by y
i
R
G
y
j
if and only if either y
i
≻ y
j
or y
i
∼ y
j
. For any two bundles in G, it is always the case that either one is preferred to the other or
there are no definite preferences between the two. Therefore, the composite relation R
G
is reflexive and complete. It is also transitive. Thus, an induced relational system G, R
G
is a preference-ordering system. Let these results be summarized as follows.
Proposition 1. A preference relational system G, ≻, where ≻ is defined as in Postulate 4, is a weak-order system i.e., ≻ is asymmetric and negatively transitive.
Proposition 2. An induced relational system G, R
G
, where ∼ is defined by the absence of definite preferences, is a preference-ordering system i.e., R
G
is reflexive, transitive, and complete.
Moreover, if the relation ≻ is weakly complete i.e., for any two bundles, y
i
and y
j
y
i
6=y
j
, in G, either y
i
≻ y
j
or y
j
≻ y
i
, the composite relation R
G
, defined by y
i
R
G
y
j
if and only if either y
i
≻ y
j
or y
i
∼ y
j
, becomes a chain. The only way that ≻ becomes weakly complete in the context of a sequentially satisficing decision rule is by being able
to come up, at the margin, with some want-satisfying property that makes preferences determinate one way or the other. Notice that by the asymmetry of ≻ and by the definition
of ∼, y
i
R
G
y
j
and y
j
R
G
y
i
must imply that y
i
is indifferent to y
j
; but if the weak completeness is met, y
i
is indifferent to y
j
if and only if y
i
is identical to y
j
. Thus, if the axiom of weak completeness is satisfied, our composite relation R
G
satisfies the property of antisymmetry i.e., for any two bundles, y
i
and y
j
, in G, y
i
R
G
y
j
and y
j
R
G
y
i
imply y
i
=y
j
. This is the case taken up by Georgescu-Roegen 1954 to demonstrate that lexicographic preferences
are not measurable.
Proposition 3. An induced relational system, G, R
G
, of Proposition 2 becomes a chain system i.e., R
G
is reflexive, transitive, complete, and antisymmetric if ≻ is weakly complete.
H. Hayakawa J. of Economic Behavior Org. 43 2000 1–34 17
Now, let BP, M be a consumer’s budget set corresponding to a price vector P and income M; i.e., BP, M≡
{y: y∈G and P·y≤M}. Also, let Ax
∗
be his satisficing set; i.e., Ax
∗
≡ {y:
y∈G and Φy≥x
∗
} Φy≥x
∗
means Φ
i
y ≥ x
i ∗
for all i=1, 2, . . . , m. We next postulate that the intersection of the budget set and the satisficing set is non-empty.
Call this intersection the satisficing feasibility set. The idea is that basic physical needs are within the feasibility of the budget set.
Postulate 5. A consumer’s satisficing feasibility set is non-empty, i.e.,
Ax
∗
∩ BP , M 6= ∅. Whether the satisficing feasibility set is non-empty or not, or, more importantly, how
large this set is, depends on to what extent the aspiration levels of wants are adjusted dynamically when choice decisions are repeated. For instance, depending on the type of
want, the aspiration level may be adjusted upward or downward, all according to the degree of easiness or difficulty experienced in day-to-day choices. Overall, however, to the extent
that many of the functional wants arise from physical needs, it would not be too unrealistic to assume that they are more or less satisfied. In an affluent society, a typical middle-class
individual’s total expenditure most likely exceeds what his basic needs require see Baxter and Moosa, 1996 for a basic need hypothesis on consumption behavior.
If the satisficing feasibility set is large, it begs a question as to how to reduce the size of this set and where to turn for effective guidance. We argue that it is social want that
serves as an instrument of indeterminacy reduction through a well-directed orientation to social and cultural norms. The fact that social want is distinctly different from physical ones
and the fact that the satisficing feasibility set is most likely to be non-empty in an affluent society suggests that a typical individual may be solving his choice problems in two steps.
In the first step, the satisficing feasibility set i.e., the set of all R
G
-maximal elements in the budget set is identified. That is, physical wants are arranged by their priorities so as to have
them satisfied sequentially to their aspiration levels. In the second step, his attention shifts to social want, whose structure, combined with the whereabouts of social norms, leads to
determinate choices by identifying those objects in the satisficing feasibility set that yield the highest social gratification.
A two-step procedural choice process: In the first step, identify the satisficing feasibility set Ax
∗
∩BP , M; i.e., select all R
G
-maximal elements from the budget set BP, M. In the second step, select those elements of this set that yield the highest satisfaction of social want.
If income is too low to yield a non-empty satisficing feasibility set, the first step will suffice to make determinate decisions. With the rise of income, the attention shifts to higher
less primary functional wants and eventually to social considerations. As the satisficing feasibility set becomes non-empty, how best to meet social want acquires the status of an im-
portant criterion for selection of desirable objects. In an affluent society, such non-functional aspects of decision making cannot be ignored. Decisions are therefore eventually guided by
such considerations as how fit choice objects are to present life styles, how effective they are for status identification and seeking, how fashionable they are to current modes of tastes,
etc. Thus, social want, as it is embedded in social capital and order, motivates individuals to select their most socially desirable objects with resources that are typically not enough
to catch up with ever increasing social needs and expectations.
18 H. Hayakawa J. of Economic Behavior Org. 43 2000 1–34
This two-step procedure should be contrasted with one suggested by Kornai 1971, in which a single element is chosen from the set of eligible alternatives at the final stage of an
elementary process with no deterministic decision rules for this selection. Final choices are randomly made with a decision distribution being defined on the set of eligible alternatives.
In our model, the criterion of how best to meet social want narrows the choices from the satisficing feasibility set.
6. Interdependence via reference groups and social want
