Reversal of the preference reversal phenomenon

Casey, Jeff T.

doi:10.1016/0749-5978(91)90013-j

Cited by 36 publications

(31 citation statements)

References 29 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Such experiments have produced mixed results, but asymmetric PR is generally less pronounced than in WTA experiments, and sometimes is not present at all. It seems that WTP treatments tend to reduce the frequency of standard reversals and to increase the frequency of non-standard ones (Lichtenstein and Slovic 1971;Knez and Smith 1987;Casey 1991). These findings are compatible with the hypothesis that PR is the product of several causal mechanisms, at least one of which is in some way linked to WTA valuations.…”

Section: Discussionsupporting

confidence: 79%

Third-generation prospect theory

2008

View full text Add to dashboard Cite

We present a new theory of decision under uncertainty: third-generation prospect theory (PT 3 ). This retains the predictive power of previous versions of prospect theory, but extends that theory by allowing reference points to be uncertain while decision weights are specified in a rank-dependent way. We show that PT 3 preferences respect a state-conditional form of stochastic dominance. The theory predicts the observed tendency for willingness-to-accept valuations of lotteries to be greater than willingness-to-pay valuations. When PT 3 is made operational by using simple functional forms with parameter values derived from existing experimental evidence, it predicts observed patterns of the preference reversal phenomenon. Keywords Prospect theory . Preference reversal . Reference dependence JEL Classification D81In this paper we present a new theory of decision under uncertainty: third-generation prospect theory (PT 3 for short). The motivation for the theory is empirical: our model is presented as a descriptive theory intended to outperform the current 'best buys' in the literature. PT 3 has three key features: reference dependence, decision weights and uncertain reference points (i.e. reference points that can be lotteries). The first two features are the common characteristics of different versions of prospect theory, including the original (or first-generation) version (Kahneman and J Risk Uncertainty

show abstract

Section: Discussionsupporting

confidence: 79%

Third-generation prospect theory

2008

View full text Add to dashboard Cite

show abstract

“…In an attempt to equalize the choice frequency across gamble types, Casey (1991Casey ( , 1994) created significant differences in the expected values of the bets in each pair. In these papers, there are four otherwise comparable data sets, two with incentives and two without: Casey (1991) experiment 2, large bets and experiment 2, small bets; and Casey (1994) large stakes bets and small stakes bets.…”

Section: Additional Evidencementioning

confidence: 99%

Preference reversals: The impact of truth-revealing monetary incentives

Berg

Dickhaut

Rietz

2010

Games and Economic Behavior

View full text Add to dashboard Cite

“…The experiments in the literature have mostly considered hypothetical gambles for money. In general, no substantial difference was found between hypothetical gambles and gambles in which participants are actually paid according to their choices (Casey, 1991;Grether & Plott, 1979;Lichtenstein & Slovic, 1973;Mellers, Chang, Birnbaum, & Ord6fiez, 1992;Pommerehne, Schneider, & Zweifel, 1982;Slovic, 1975, Experiment 3;Tversky & Kalaneman, 1992); an exception is Bohm (1994).…”

Section: Possible Objections To Our Findingsmentioning

confidence: 99%

“…In the choosing task, (10, 5 Migr) was preferred to (20, 5 Migr), but in the matching task, the participant assigned a higher value to (20, 5 Migr) than to (10, 5 Migr). Traditional preference reversals (Beattie & Baron, 1991;Bimbaum et al, 1992;Bostic, Herrnstein, & Luce, 1990;Casey, 1991;Cho, Luce, & yon Winterfeldt, 1994;Delquit, 1993;Fischer & Hawkins, 1993;Fischhoff et al, 1980;Goldstein & Einhorn, 1987;Gonz,~iles-Vallejo & Wallsten, 1992;Grether & Plott, 1979;Hawkins, 1994;Hershey & Schoemaker, 1985;Johnson & Schkade, 1989;Lichtenstein & Slovic, 1971;Lichtenstein & Slovic, 1973;Lindman, 1971;Loomes et al, 1989;Mellers, Chang, et al, 1992;Mellers, Ord6fiez, & Birnbaum, 1992;Pommerehne et al, 1982;Slovic, 1975;Slovic et al, 1990;Slovic & Lichtenstein, 1983;Tversky et al, 1988;Tversky et al, 1990) occur when stimuli are compared for more than one attribute, and they have been explained mostly by changes in the weighting with which the attributes are combined in different tasks. This explanation cannot be applied to our findings.…”

Section: Implications Of Our Findingsmentioning

confidence: 99%

Preference reversals: Violations of unidimensional procedure invariance.

Stalmeier¹,

Wakker²,

Bezembinder³

1997

Journal of Experimental Psychology: Human Perception and Perfor

View full text Add to dashboard Cite

Preference reversals have usually been explained by weighted additive models, in which different tasks give rise to different importance weights for the stimulus attributes, resulting in contradictory trade-offs. This article presents a preference reversal of a more extreme nature. Let (10, 5 Migr) denote living 10 years with a migraine for 5 days per week. Many participants preferred (10, 5 Migr) to (20, 5 Migr). However, when asked to equate these two options with a shorter period of good health, they usually demanded more healthy life years for (20, 5 Migr) than for (10, 5 Migr). This preference reversal within a single dimension cannot be explained by different importance weights and suggests irrationalities at a more fundamental level. Most participants did not change their responses after being confronted with their inconsistencies.

show abstract

Reversal of the preference reversal phenomenon

Cited by 36 publications

References 29 publications

Third-generation prospect theory

Third-generation prospect theory

Preference reversals: The impact of truth-revealing monetary incentives

Preference reversals: Violations of unidimensional procedure invariance.

Contact Info

Product

Resources

About