Type Indeterminacy: A Model for the KT(Kahneman-Tversky)-Man

TL;DR

This paper introduces a quantum-inspired model for agent preferences that are indeterminate until interaction, capturing uncertainty and noncommutative behavior patterns in decision-making.

Contribution

It applies quantum formalism to model indeterminate preferences, providing a novel framework for understanding complex decision behaviors beyond classical models.

Findings

Preferences can be modeled as superpositions of potential types.

Behavioral patterns exhibit noncommutativity consistent with quantum formalism.

Illustrative examples demonstrate the approach's applicability.

Abstract

In this paper we propose to use elements of the mathematical formalism of Quantum Mechanics to capture the idea that agents' preferences, in addition to being typically uncertain, can also be indeterminate. They are determined (i.e., realized, and not merely revealed) only when the action takes place. An agent is described by a state that is a superposition of potential types (or preferences or behaviors). This superposed state is projected (or "collapses") onto one of the possible behaviors at the time of the interaction. In addition to the main goal of modelling uncertainty of preferences that is not due to lack of information, this formalism seems to be adequate to describe widely observed phenomena of noncommutativity in patterns of behavior. We explore some implications of our approach in a comparison between classical and type indeterminate rational choice behavior. The potential of the approach is illustrated in two examples.