Preferences as parameters, values as measurements

To apply economics to nonhuman systems, we need ways of thinking about the elements of economics, like preferences and values, in purely third-person terms, without expecting to be able to empathize with the economic agents under study. We can do so by thinking about the behavior of an economic agent as being the outputs of an internal model (or bodily model). Preferences and values can be cast in internal model terms, allowing us to observe and study them in many contexts that are unfamiliar to our first-person experiences.

One hypothesis is that the decisions produced by an internal model are selected from an ordering of alternatives called a preference order. Preferences should therefore be whatever parameters determine the construction of preference orders. Moreover, all of the outputs we call cognition and development should be described according to this model, not just the phenomena we typically recognize as choice. In general, the goal-seeking behavior of an organism or other collective intelligence is an output of its internal/bodily model, those outputs being the selections from the constructed preference orders. Therefore, preferences can be thought of as the parameters that determine how the internal model changes in interaction with the environment, analogous to Bayesian priors.

Values, in turn, are measurements taken by the internal/bodily model. For example, the value of the width of a table might be five feet. All values are measurements of this sort. These measurements are used to do thermodynamic work, so the system will work to protect the measurements from perturbations and distrubances to the internal model that would otherwise mess up the measurements. The work done to take and preserve the measurements is exactly what we expect an economic system to do, namely, to achieve and maintain values. Because values do work, they are naturally valuable. The measurement of a value’s value determines how much the system is willing to give up a different value to preserve it.