Pre‐Play Learning and the Preference Reversal Phenomenon

Abstract

Elicited preference rankings for two lotteries are typically inconsistent across choice and pricing tasks. We test whether pre‐play learning makes preference rankings consistent. Pre‐play learning denotes ex‐ante lottery learning, where subjects observe playing lotteries before making decisions. We find that pre‐play learning makes the average selling prices for the p‐bet, of subjects who choose the p‐bet, higher than their average selling prices for the $‐bet. However, pre‐play learning is not strong enough to equalize the rates of standard and non‐standard reversals, although pre‐play learning reduces the rate of standard reversals.