Preferences are a statement of the satisfaction one receives from particular states of the world (eg, from the outcome of a decision). Formally, one prefers state A to state B, if, given a deterministic choice between these two states, one would choose A. Preferences can be either direct (when they pertain to attributes that directly constitute the outcomes of a decision) or indirect (when they pertain to attributes that only indirectly relate to the outcomes of a decision). For example, while a patient undergoing surgery may have only indirect preferences over the type of anesthetic to be used, he has direct preferences over the discomfort, monetary effects, and length-of-life effects that might result from the chosen anesthetic. Decision theory requires that preferences over the possible outcomes of a decision be transitive (ie, if A is preferred to B and B is preferred to C, then A is preferred to C).

See also: Money Pump.