Abstract

This paper proposes a conceptual model of decision-making tying specific preferences to broader individual goals. Specifically, we consider terminal goals, representing fundamental objectives, and instrumental goals, serving as complexity-reducing intermediate steps toward achieving terminal goals and determining eventual preferences. Notably, the hierarchical goal structure allows for contextual misalignments between different instrumental goals, which may lead to suboptimal decisions – as evaluated from an outside perspective. Thus, applied to the discussion about nudging and paternalism, the model provides a methodological justification for paternalistic interventions as it is compatible with arguments in favour of interventions aimed to correct such choices.