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When Are Preferences Consistent? The Effects of Task Familiarity and Contextual Cues on Revealed and Stated Preferences

Felix Schlaepfer () and Baruch Fischhoff ()
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Felix Schlaepfer: Socioeconomic Institute, University of Zurich
Baruch Fischhoff: Department of Social and Decision Sciences, Department of Engineering and Public Policy, Carnegie Mellon University

Authors registered in the RePEc Author Service: Felix Schläpfer

No 1007, SOI - Working Papers from Socioeconomic Institute - University of Zurich

Abstract: Traditionally, economists make a sharp distinction between stated and revealed preferences, viewing the latter as more fully meeting the assumptions of economic analysis. Here, we consider one form of empirical evidence regarding this belief: the consistency of choices in stated and revealed preference tasks. We show that both kinds of task can produce consistent choices, suggesting that both can measure underlying preferences, if necessary conditions are met. We propose that a necessary condition is that task be either familiar to those facing it or offer contextual cues that substitute for familiarity, such as prices in competitive markets or recommendations from trusted, knowledgeable sources. We show that how well decision makers achieve such understanding is often confounded with the method that researchers use. Considering task familiarity not only clarifies some of the conflicting evidence regarding revealed and stated preference methods, but raises potentially productive questions regarding the roles of social institutions in shaping preferences.

Keywords: Consistency; contingent valuation; framing; public goods; revealed preferences; stated preferences; validity (search for similar items in EconPapers)
JEL-codes: D01 D03 Q51 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2010-08
New Economics Papers: this item is included in nep-cbe, nep-dcm and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:soz:wpaper:1007

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