Transitivity in preferences

Abstract

The present paper deals with one of the most important assumptions in consumer preferences patterns: transitivity. This assumption states that, logically, selections between goods are rational because of, among other reasons, the transitivity statement, which states that people always prefer goods in the following order: A preferred to B, and B preferred to C, so A preferred to C. Aiming to prove the validity of this principle, we conducted an experiment with 70 subjects in which we asked them about their preferences in edible and non-edible goods. The methodology used was a survey, which allowed us to analyze three distinct situations—1) when individuals face goods choices without restrictions, 2) when they face budget restrictions and price changes, and 3) when they face decreased disposable income. The results showed that mostly there was no evidence of transitivity in consumer preferences. On average, transitivity appeared in only 8% of the whole sample, and, in cases where transitivity was proved, it was revealed to be strong. The preferences were also transitive mostly in edible goods, rather than non-edible goods.