Queer theory offers insights for political economy on how humans induce categories and conflate traits in ways psychologists call "illusory correlations." A Bayesian simulation is constructed of people interacting and using probits to compare their rankings of alternatives to estimate the subjective probability i.) that others have the same tastes as them, and ii.), for each alternative, that this alternative is their best choice. These simulations are found to, at least simplistically, resemble a type of illusory correlation which gained increased prominence in the United States from 1930 to 1960, and earlier in the United Kingdom when queer panics conflated "predatory" and "traitorous" with lesbian/gay. This modeling of the social articulation of preferences leads to conjectures on the role of Michel Foucault's épistémè (1972), Barbara Ponse's principle of consistency (1978), Jeffrey Escoffier's master code (1985), Sandra Bem's schema (1981), John R. Searle's Background (1990, 1992, 1995), and Judith Butler's linguistic norms (1993). Here these are called cognitive dispositions or codes, and are seen as social structures which grow as individuals try to form homopreference networks to process information in parallel, collectively. The concept of identity or ideology entrepreneurs is used to establish the importance of institutional analysis for political economy. Such an incorporation of desire on a par with logic-"rationality"-is called post/modern and is used to overcome the silence in both neoMarxian and neoclassical political economy on queer theory and queer issues.