Stochastic Preferences

Stochastic preferences refer to the idea that individuals' choices are not always perfectly consistent or predictable. Instead, their preferences are seen as probabilistic, meaning that when faced with similar options, they may choose differently at different times. This concept recognizes that preferences can be influenced by uncertainty, mood, or other factors, making behavior somewhat random but still governed by underlying tendencies. It helps economists and decision theorists model real-world decision-making more accurately than assuming people always make the same choices in identical situations.