The Effects of Social Pressure on Fundamental Choices: Indecisiveness and Deferral

Abstract

In mainstream neoclassical economics, utility maximization is the only engine of individual action, and the other or the social, if it is modeled for decisions deemed fundamental, it is done as a tacit externality parameter affecting an agent's maximized payoff. And even when hitched to a social reference point, a fully decisive and immediate response is invariably assumed. In this paper, we propose a non-standard articulation of the trade-off between personal utility and social distance, one motivated by experimental evidence from psychology, management science, and economics. Our approach deconstructs non-recurrent consumer choice to two stages: a non-decisive first stage in which a binary relation, called one-many ordering, yields an interval, the consideration set, to which the deferred choice is confined; a decisive second stage in which the distance from the average social choice, and future social expectations, are taken into account in present utility. Finally, we embed this indecisive consumer in an exploratory game-theoretic setting, and show that indecisiveness and choice deferral may cause social loss.