From Outcome-Based to Language-Based Preferences
Valerio Capraro, Joseph Y. Halpern, Matjaz Perc
TL;DR
This paper surveys why monetary payoff maximization fails to fully explain human behavior in one-shot social interactions, arguing that both moral considerations and the language used to describe actions shape decisions. It surveys a progression of models from outcome-based social preferences to moral and norm-based theories, and then introduces language-based preferences as a general framework that can capture framing, beliefs, and normative concerns. The authors argue for a paradigm shift toward language-based preferences, providing mathematical formulations and cross-disciplinary insights, and they outline key directions for future work, including norm conflicts, norm dimensions, and neurocognitive underpinnings. The work has broad implications for economic theory, experimental design, and interdisciplinary research, suggesting that language and norms are essential components of decision-making beyond monetary outcomes.
Abstract
We review the literature on models that try to explain human behavior in social interactions described by normal-form games with monetary payoffs. We start by covering social and moral preferences. We then focus on the growing body of research showing that people react to the language in which actions are described, especially when it activates moral concerns. We conclude by arguing that behavioral economics is in the midst of a paradigm shift towards language-based preferences, which will require an exploration of new models and experimental setups.