Answer to Question #91065 in Microeconomics for John Manda

Question

Ken walks into an ice-cream parlor.Waiter:“We have vanilla and chocolate today.”
Ken:“I’ll take vanilla.”Waiter:“I almost forgot.We also have strawberry.”Ken:“In
that case,I’ll take chocolate.”What standard property of decision making is Ken
violating?

Answer 1

The property of decision making that Ken is violating is transitivity property. This is a property which is usually expected to be exhibited by preferences. In this case, since Ken preferred to take vanilla instead of chocolate, according to transitivity property, it is expected that even when another flavor is introduced, he would still prefer vanilla. However, Ken changes his preference and decides to take chocolate thus violating the transitivity property.

Ken is violating the independence of the third alternative. It says that if we have to choose between two alternatives, the third shouldn't affect our decision making. When Ken heard there is also strawberry ice cream, he decides to take chocolate, which has no mutual connection.