Universität zu Köln

Alos-Ferrer, Carlos, Granic, Dura-Georg, Kern, Johannes and Wagner, Alexander K. ORCID: 0000-0002-2124-7550 (2016). Preference reversals: Time and again. J. Risk Uncertain., 52 (1). S. 65 - 98. DORDRECHT: SPRINGER. ISSN 1573-0476

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Abstract

This paper sheds new light on the preference reversal phenomenon by analyzing decision times in the choice task. In a first experiment, we replicated the standard reversal pattern and found that choices associated with reversals take significantly longer than non-reversals, and non-reversal choices take longer whenever long-shot lotteries are selected. These results can be explained by a combination of noisy lottery evaluations (imprecise preferences) and an overpricing phenomenon associated with the compatibility hypothesis. The first cause explains the existence of reversals, while the second explains the predominance of a particular type thereof. A second experiment showed that the overpricing phenomenon can be shut down, greatly reducing reversals, by using ranking-based, ordinally-framed evaluation tasks. This experiment also disentangled the two determinants of reversals, because imprecise evaluations still deliver testable predictions on decision times even in the absence of the overpricing phenomenon. Strikingly, when unframed ranking tasks were used, decision times in the choice phase were greatly reduced, even though this phase was identical across treatments. This observation is consistent with psychological insights on conflicting decision processes.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Alos-Ferrer, Carlos UNSPECIFIED UNSPECIFIED UNSPECIFIED Granic, Dura-Georg UNSPECIFIED UNSPECIFIED UNSPECIFIED Kern, Johannes UNSPECIFIED UNSPECIFIED UNSPECIFIED Wagner, Alexander K. UNSPECIFIED orcid.org/0000-0002-2124-7550 UNSPECIFIED
URN:	urn:nbn:de:hbz:38-284955
DOI:	10.1007/s11166-016-9233-z
Journal or Publication Title:	J. Risk Uncertain.
Volume:	52
Number:	1
Page Range:	S. 65 - 98
Date:	2016
Publisher:	SPRINGER
Place of Publication:	DORDRECHT
ISSN:	1573-0476
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language RESPONSE-TIMES; UTILITY MEASUREMENT; EXPECTED UTILITY; DECISION-MAKING; FREE-CHOICE; JUDGMENT; ALTERNATIVES; EXPLANATIONS; INVARIANCE; BEHAVIOR Multiple languages Business, Finance; Economics Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/28495