The market for preferences

Learning processes are widely held to be the mechanism by whichboundedly rational agents adapt to environmental changes. Weargue that this same outcome might also be achieved by a differentmechanism, namely specialisation and the division of knowledge,which we here extend to the consumer side of the economy. Wedistinguish between high-level preferences and low-level preferencesas nested systems of rules used to solve particular choice problems.We argue that agents, while sovereign in high-level preferences,may often find it expedient to acquire, in a pseudo-market,the low-level preferences in order to make good choices whenpurchasing complex commodities about which they have littleor no experience. A market for preferences arises when environmentalcomplexity overwhelms learning possibilities and leads agentsto make use of other people's specialised knowledge and decisionrules.