Perfectionism and Preference Cycles: A Behavioral Model of Deficiency-Penalized Utility

This paper introduces a formal behavioral model to explain how perfectionist tendencies, especially those associated with obsessive-compulsive traits, can lead to systematic violations of transitive preferences and inefficient decision-making. Drawing from behavioral economics and clinical psychology, we propose a deficiency-penalized utility framework, in which individuals evaluate each option not only by its intrinsic merits but by the psychological costs of its perceived shortcomings relative to other alternatives.Unlike traditional models of bounded rationality, which emphasize cognitive limitations such as limited attention or computational power, our model focuses on affective distortions in the evaluation process. Specifically, it formalizes how emotionally salient comparisons across options can create asymmetric deficiency penalties that result in non-transitive preference cycles, such as A ≻ B ≻ C ≻ A. These cycles, we argue, emerge from a structured but emotionally charged decision mechanism aimed at minimizing flaws rather than maximizing utility.We develop the model using a multi-attribute utility framework, incorporating direction-dependent salience functions and a sensitivity parameter γ to capture perfectionist intensity. We demonstrate through a numerical example how such a framework systematically generates preference intransitivity. The model also accounts for observed phenomena such as decision paralysis, excessive deliberation, and post-choice regret among individuals with high evaluative sensitivity.Beyond its theoretical contribution, this framework has practical implications for consumer behavior, mental health economics, and behavioral policy design. It provides a psychologically grounded rationale for why increasing choice sets may reduce welfare for certain individuals and why emotionally informed decision environments can enhance both coherence and well-being. The model generates testable predictions for experimental economics and offers pathways for integrating affective distortions into broader welfare analysis.By formalizing how imperfection aversion reshapes preference logic, this paper expands the theoretical foundations of behavioral economics and offers a structured lens through which to understand emotionally bounded rationality.