Do violations of classical rationality theory imply that agents are acting against their self-interest? To answer this question, we investigate whether completeness and transitivity necessarily hold when agents choose outcome rationally-that is, their choice sequences do not lead to dominated outcomes. We show that, because of the danger of money pumps and other manipulations, outcome rationality implies that agents must have transitive psychological preferences. Revealed preferences, on the other hand, must be complete since agents can be forced to choose from any set of options. But these justifications of transitivity and completeness cannot be combined. We show that if psychological preferences are incomplete then revealed preferences can be intransitive without exposing agents to manipulations or violating outcome rationality. We also show that a specific case of nonstandard behavior, status quo maintenance, is outcome-rational in the simple environments considered in the experimental literature, but not in more complex settings.

Several decision models in marketing science and psychology assume that a consumer chooses by proceeding sequentially through a checklist of desirable properties. These models are contrasted to the utility maximization model of rationality in economics. We show on the contrary that the two approaches are nearly equivalent. Since the number of preference discriminations that an agent can make increases exponentially in the number of properties used, checklists provide a rapid procedural basis for utility maximization.

The indeterminacy claim for competitive price systems made by Sraffa (1960) is examined by placing Sraffa's work in an intertemporal general equilibrium model. We show that indeterminacy occurs at a natural type of equilibrium. Moreover, the presence of linear activities instead of a differentiable technology is crucial and the indeterminacy is constructed, as in Sraffa, by fixing some or all of the economy's aggregate quantities. On the other hand, an extra condition, that some factors have inelastic excess demand is necessary, and, unlike Sraffa's model, relative prices must be allowed to vary through time. Sraffian indeterminacy and the generic finiteness of the number of equilibria are reconciled by showing that indeterminacy occurs at a measure-zero set of endowments. We use an overlapping-generations model to show that these endowments nevertheless arise systematically and that indeterminacy does not occur when relative prices are constant through time.

After reviewing the evidence for status quo maintenance (SQM), I consider how to reconcile SQM with traditional consumer theory. Behavioural economists usually let agents' preferences change as a function of their endowments, treating the same person with different endowments as a set of distinct agents. Many properties of preferences then become immune to empirical test and it becomes impossible to judge whether an agent's decisions make the agent better or worse off. This impedes prediction of when decision rules are likely to change. SQM can alternatively be explained with unchanging preferences if preferences are incomplete. SQM is then consistent with self-interest and there is no reason why it should not persist.The fundamental conservatism of economic agents, their reluctance to move away from what they deem to be the status quo, has been documented by several waves of academic study. Status quo bias, the endowment effect, loss aversion and the willingness to accept-willingness to pay disparity all describe agents who must be paid a premium to trade away from their endowments.I review some empirically well-established cases of status quo maintenance, show how they violate traditional consumer theory and then consider how the phenomenon can be explained. Behavioural economists have usually let agents' preferences change as a function of their endowments, thus treating the same person with different endowments as a set of distinct agents. But then it becomes impossible to judge whether an agent's decisions leave the agent better or worse off and hence whether the agent has reason to adopt new ways of making decisions. One can alternatively explain status quo maintenance while preserving the identity of agents through time if preferences are allowed to be incomplete. Agents with incomplete preferences maintain the status quo when they follow the simple rule of refusing to trade their endowment for unranked bundles and waiting until offered an alternative that is ranked superior. Since this rule will respect agents' interests -agents will not be led to outcomes they judge to be inferior -there are no rationality grounds for thinking that status quo maintenance cannot persist indefinitely.Part of the clash between behavioural theory and rationality theory hinges on the role played by theoretical models. In the behavioural view, models are designed to make accurate predictions, while under the rationality view, models are also supposed to identify the types of behaviour that violate self-interest and which therefore may disappear as agents learn or face selective pressure. One purpose of this essay is to argue that status quo maintenance passes the test of selfinterest; perhaps these arguments will help persuade the doubters who insist that * This paper incorporates part of 'The economics of incomplete preferences', (Mandler, 1998), the more formal sections of which appear in Mandler (2004). I thank Daniel Kahneman, Peter Klibanoff, David Laibson, David Pearce and an anonymous referee for helpful comments and s...

Several decision models in marketing science and psychology assume that a consumer chooses by proceeding sequentially through a checklist of desirable properties. These models are contrasted to the utility maximization model of rationality in economics. We show on the contrary that the two approaches are nearly equivalent. Since the number of preference discriminations that an agent can make increases exponentially in the number of properties used, checklists provide a rapid procedural basis for utility maximization.