Stochastic Choice and Preference Reversals
In: University of Zurich, Department of Economics, Working Paper No. 370, Revised version
In: University of Zurich, Department of Economics, Working Paper No. 370, Revised version
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In: Michael O'Donnell, Ellen R. K. Evers (2019), "Preference Reversals in Willingness to Pay and Choice," Journal of Consumer Research, 45, 6 (April), 1315–1330
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In: Thinking and Reasoning, Band 5, Heft 2, S. 175-188
Research on preference reversals has demonstrated a disproportionate influence of outcome probability on choices between monetary gambles. The aim was to investigate the hypothesis that this is a prominence effect originally demonstrated for riskless choice. Another aim was to test the structure compatibility hypothesis as an explanation of the effect. The hypothesis implies that probability should be the prominent attribute when compared with value attributes both in a choice and a preference–rating procedure. In Experiment 1, two groups of undergraduates were presented with medical treatments described by two value attributes (effectiveness and pain-relief). All participants performed both a matching task and made preference ratings. In the latter task, outcome probabilities were added to the descriptions of the medical treatments for one of the groups. In line with the hypothesis, this reduced the prominence effect on the preference ratings observed for effectiveness. In Experiment 2, a matching task was used to demonstrate that probability was considered more important by a group of participating undergraduates than the value attributes. Furthermore, in both choices and preference ratings the expected prominence effect was found for probability.
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In: Management Science, forthcoming
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In: Journal of consumer behaviour, Band 11, Heft 1, S. 81-88
ISSN: 1479-1838
ABSTRACTThis article explores the impact of consumers' regulatory goals on their relative focus on hedonic (versus utilitarian) benefits of products. Drawing from extant literature, we argue that promotion‐focused consumers will exhibit more favorable attitude towards a product when its hedonic benefits are highlighted in comparison to its utilitarian benefits. Prevention‐focused consumers on the other hand will exhibit more favorable attitude towards a product when its utilitarian benefits are highlighted in comparison to its hedonic benefits. We further argue that this effect is moderated by contextual factors, such as evaluation mode. In addition, we argue that the posited difference only holds when the hedonic and utilitarian products are evaluated individually. When the two products are evaluated jointly, both promotion and prevention‐focused individuals will exhibit more favorable attitude towards the hedonic product. Two studies were conducted to test the hypotheses and findings supported our predictions. Copyright © 2011 John Wiley & Sons, Ltd.
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In: NBER Working Paper No. w16036
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In: Journal of benefit-cost analysis: JBCA, Band 3, Heft 2, S. 1-12
ISSN: 2152-2812
The possibility of preference reversals according to the Kaldor-Hicks (KH) criterion in benefit-cost analysis has concerned economists since Scitovsky (1941) first published his results. Lawyers and philosophers have argued that the potential of reversals calls the use of benefit-cost analysis into question, implying elimination of its use. We demonstrate that reversals occur only with inferior goods in the case of static production possibilities and that reversals occur under changing production possibilities only when production possibilities frontiers cross, which is a myopic characterization that ignores practical cases of global production possibilities.
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In: IZA Discussion Paper No. 16208
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In: Darden Business School Working Paper No. 3806114
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In: Journal of political economy, Band 128, Heft 5, S. 1673-1711
ISSN: 1537-534X
In: NBER Working Paper No. w25257
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