Do Preference Reversals Disappear When We Allow for Probabilistic Choice?

Graham Loomes () and Ganna Pogrebna ()
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Graham Loomes: Warwick Business School, University of Warwick, Coventry CV4 7AL, United Kingdom
Ganna Pogrebna: International Institute for Product and Service Innovation, Warwick Manufacturing Group, University of Warwick, Coventry CV4 7AL, United Kingdom

Management Science, 2017, vol. 63, issue 1, 166-184

Abstract: The “preference reversal phenomenon,” a systematic disparity between people’s valuations and choices, poses challenges for theory and policy. Using a very general formulation of probabilistic preferences, we show that the phenomenon is not mainly due to intransitive choice. We find a high degree of regularity within choice tasks and also within valuation tasks, but the two types of tasks appear to evoke very different cognitive processes, even when the experimental environment tries to minimise differences. We discuss possible implications for modelling and eliciting preferences.

Keywords: preference reversal phenomenon; probabilistic preferences; stochastic choice (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (8)

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