Contextual deliberation and the choice-valuation preference reversal
Journal of Economic Theory, 2021, vol. 195, issue C
Revealed preferences between lotteries can be asymmetrically reversed across choice and valuation. The ongoing debate is whether the procedure-invariance principle is violated. This research presents a parsimonious theory to reconcile asymmetric preference reversals with procedure invariance. When risk attitude is ex ante imperfectly known, preference-eliciting procedures can endogenously influence revealed preferences through affecting the incentive for information retrieval/acquisition (i.e., deliberation). As predicted, when lottery pairing was known, experiment participants exhibited substantially less asymmetric reversals by stating mean-preserving and more dispersed valuations. Therefore, the endogeneity of asymmetric preference reversals can be substantiated.
Keywords: Choice; Deliberation; Preference reversal; Procedure invariance; Valuation (search for similar items in EconPapers)
JEL-codes: C91 D01 D11 D83 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:195:y:2021:i:c:s0022053121001022
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