Intransitivity in Theory and in the Real World

Abstract

This work considers reasons for and implications of discarding the assumption of transitivity—the fundamental postulate in the utility theory of von Neumann and Morgenstern, the adiabatic accessibility principle of Caratheodory and most other theories related to preferences or competition. The examples of intransitivity are drawn from different fields, such as law, biology and economics. This work is intended as a common platform that allows us to discuss intransitivity in the context of different disciplines. The basic concepts and terms that are needed for consistent treatment of intransitivity in various applications are presented and analysed in a unified manner. The analysis points out conditions that necessitate appearance of intransitivity, such as multiplicity of preference criteria and imperfect (i.e., approximate) discrimination of different cases. The present work observes that with increasing presence and strength of intransitivity, thermodynamics gradually fades away leaving space for more general kinetic considerations. Intransitivity in competitive systems is linked to complex phenomena that would be difficult or impossible to explain on the basis of transitive assumptions. Human preferences that seem irrational from the perspective of the conventional utility theory, become perfectly logical in the intransitive and relativistic framework suggested here. The example of competitive simulations for the risk/benefit dilemma demonstrates the significance of intransitivity in cyclic behaviour and abrupt changes in the system. The evolutionary intransitivity parameter, which is introduced in the Appendix, is a general measure of intransitivity, which is particularly useful in evolving competitive systems.

Keywords

• intransitivity
• complex evolving systems
• non-conventional thermodynamics
• utility
• behavioural economics
• population dynamics