3. Preference Reversal Flashcards
What is preference reversal?
A tendency for an individuals ranking of two alternatives to depend on the procedure used to elicit it
What is the result of a standard reversal?
Choose P but value $ as greater than P
What is the result of a non standard reversal?
Choose $ but value P as greater than $
Has preference reversal been replicated in the field?
Yes Lichtenstein and slovic replicated results with gambles at Las Vegas casino
What are discount reversals?
Where individuals pick the smaller sum now but value the larger sum later as more valuable
What is the proposed explanation of preference theory using incentive mechanisms?
Non standard preferences arise due to features of the experimental incentive mechanisms rather than any real behaviour
How well does the incentive mechanism argument explain preference reversal?
Not well, PR reproduced in experiments rules out this interpretation
How does psychological process theory explain preference reversal?
Decisions aren’t fully determined by pre-existing preferences. Different decision modes may invoke different decision processes which may lead to different outcomes of choice/ valuation
What are the two cases of PR as a failure of invariance?
Overpricing $ and underpricing P
What was the extra feature added to the experiment of Tversky, Slovic and Kahneman?
They introduced a certain value choice C and asked individuals to rank it against P and $
What were the findings of TSK on the reasons for PR in 1990?
Predominantly caused by overvaluing $ bets
What is an imprecision interval?
The range of money where you are unsure between picking a lottery and a sure bet
When does the imprecision interval increase?
When the distance from certainty increases
When are more non standard reversals found?
In probability valuation tasks
What did Butler and Loomes 2007 findings support?
-The concept of imprecise preference
-Imprecision as account of PR
-Support for their simple model of how values are constructed
