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Rational Choice Hypothesis as X-point of Utility Function and Norm Function

Takeshi Kato, Yasuyuki Kudo, Junichi Miyakoshi, Jun Otsuka, Hayato Saigo, Kaori Karasawa, Hiroyuki Yamaguchi and Yasuo Deguchi

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Abstract: Towards the realization of a sustainable, fair and inclusive society, we proposed a novel decision-making model that incorporates social norms in a rational choice model from the standpoints of deontology and utilitarianism. We proposed a hypothesis that interprets choice of action as the X-point for individual utility function that increases with actions and social norm function that decreases with actions. This hypothesis is based on humans psychologically balancing the value of utility and norms in selecting actions. Using the hypothesis and approximation, we were able to isolate and infer utility function and norm function from real-world measurement data of actions on environmental conditions and elucidate the interaction between the both functions that led from current status to target actions. As examples of collective data that aggregate decision-making of individuals, we looked at the changes in power usage before and after the Great East Japan Earthquake and the correlation between national GDP and CO2 emission in different countries. The first example showed that the perceived benefits of power (i.e., utility of power usage) was stronger than the power usage restrictions imposed by norms after the earthquake, contrary to our expectation. The second example showed that a reduction of CO2 emission in each country was not related to utility derived from GDP but to norms related to CO2 emission. Going forward, we will apply this new X-point model to actual social practices involving normative problems, and design the approaches for the diagnosis, prognosis and intervention of social systems by IT systems.

Date: 2020-02, Revised 2020-06
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Published in Applied Economics and Finance, Vol. 7, No. 4 (2020) 63-77

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Handle: RePEc:arx:papers:2002.09036