Context-dependent Preferences Research Articles

Easier comparison of bets in evaluation does not reduce classical preference reversals: Evidence against a context-dependent explanation.

In preference reversals, subjects express different rankings over a set of alternatives depending on how preferences are elicited. In classical reversal tasks, for instance, subjects often select a safe bet over a risky one when given a choice between the two in a pair, but then assign a higher monetary evaluation to the risky bet. Motivated by a rich literature on context-dependent preferences, we conjecture that comparisons across bets in a pair can influence both Choice and Evaluation. Yet deciders are less likely to mentally compare the bets in the latter case, as bets are typically evaluated in isolation. This asymmetry between Choice and Evaluation is, we surmise, one cause of the reversals. If we further assume that memory decay affects mental comparisons in Evaluation, the account predicts order and timing effects on the reversal probability. We run several treatments designed to facilitate or hinder the retrieval from memory of the alternative bet during evaluation of a bet. However, the reversal rate does not vary across treatments in the predicted direction, and we find no systematic order or timing effects. We conclude that reversals are not influenced by the ease with which subjects recall the alternative bet during the evaluations, which suggests in turn that a relatively smaller frequency of comparisons across bets during the (typically isolated) evaluations is not a significant cause of reversals.

The view from Manywhere: normative economics with context-dependent preferences

Abstract We propose a methodology for normative evaluation when preferences are context-dependent. We offer a precise definition of context-dependence and formulate a normative criterion of self-determination, according to which one situation is better than another if individuals are aware of more potential contexts of a choice problem. We provide two interpretations of our normative approach: an extension of Sugden’s opportunity criterion and an application of Sen’s positional views in his theory of justice. Our proposition is consistent with Muldoon’s and Gaus’ approaches of public reason in social contract theory, which account for the diversity of perspectives in non-ideal worlds.

Context-dependent preferences for a decision support system's level of automation

Many organizations use decision support systems (DSS) to support DSS users in their daily work demands (e.g., high workload, insufficient information, ambiguous situations). A key question regarding their interaction is how the decision-control is divided between the DSS and the user, represented by the system's level of automation (LoA). To investigate the need for an adaptable DSS where users can manually adjust the LoA across situations, we used a vignette design to examine whether users prefer different LoA in different situations (i.e., six situational criteria, each manipulated by two specifications; e.g., low vs. high workload). In the twelve vignettes, the 116 participants should imagine working in an emergency control-center—a setting they were familiar with from previous experiments. Our results showed significant differences between the two corresponding vignettes, indicating that users prefer different LoA across situations. However, after controlling for the participants' overall preference for a situation-independent baseline LoA, the significant differences between all paired vignettes disappear. Our results have implications for whether situational or individual criteria are more important regarding LoA preferences, adaptable DSS, and for human-centered design based on user profiles. We discuss our findings in relation to the broader literature on trust and acceptance of DSS.

Pacos: Modeling preference reversals in users’ context-dependent choices

Choice problems refer to the problem of selecting the best choices from several available items, and learning users’ preferences in choice problems is of great importance in understanding users’ decision making mechanisms and providing personalized services. Existing works typically assume that people evaluate items independently. In practice, however, users’ preferences depend on the market in which items are placed, which is known as the context effects; and the order of users’ preferences for two items may even be reversed, which is called preference reversals. In this work, we identify three factors contributing to the context effects: users’ adaptive weights, the inter–item comparison, and display positions. We propose a context-dependent preference model named Pacos as a unified framework to address three factors simultaneously, and consider two design methods including an additive method with high interpretability and an ANN-based method with high accuracy. We study the conditions for preference reversals to occur and provide a theoretical proof of the effectiveness of Pacos in predicting when preference reversals would occur. Experimental results show that the proposed method has better performance than prior works in predicting users’ choices, and has great interpretability to help understand the cause of preference reversals.

National brand’s competition with premium private labels: The role of context-dependent preferences

Retailers are expanding their private labels into multitier settings by introducing premium private labels (PPLs) that are quality equivalent to national brands (NBs), and thus in direct competition with the latter. However, recent empirical findings cast doubt on the existence of this relationship. We reconcile this discrepancy by adopting a modified utility model with context-dependent preferences. While the literature shows that consumers prevalently exhibit context-dependent behavior in retail markets and that models adopting this behavior better explain the market data, our results reveal that quality-equivalent PPLs can benefit NBs by shifting consumers’ preferences from low- to high-quality tiers. The NB manufacturers’ gain in the inter-tier competition can offset their loss in the intra-tier competition; thus, NB manufacturers may indeed benefit from PPL introductions. Based on our updated utility model, we provide more accurate guidelines to the NB manufacturers to help them profitably compete with PPLs.

Effects of consumers' context‐dependent preferences on product bundling

Bundling can change consumers' choice set and affect their purchase decision. It is well documented that consumers' preferences depend on the bundling context. In this paper, we investigate the effects of consumers' context‐dependent preferences (CDPs) on the firm's optimal bundling strategy in various competitive situations. We consider a market where a monopolist firm in product category A also sells a product in product category B. We analyze three scenarios in category B: (1) an independent firm selling a higher quality product, (2) two independent firms selling the higher quality product, and (3) the monopolist in category A is also a monopolist in category B. We find that CDPs can indeed change the firm's optimal bundling strategy. When the firm has a competitive disadvantage in category B, CDPs encourage the firm to offer the bundle (by either pure bundling or mixed bundling). Furthermore, if category B market is so competitive that the firm possesses negligible market power, mixed bundling can be strictly more effective at increasing the firm's profit than pure bundling because mixed bundling can better take advantage of CDPs. In contrast, if the firm has monopoly power in both categories, CDPs discourage the introduction of the bundle, and pure‐component selling is optimal.

Structured decision making to navigate trade‐offs between multiple conservation values in threatened grasslands

AbstractManaging biodiversity often requires making difficult trade‐offs, especially when threatened species and ecosystems overlap in their distributions, and management actions to promote their persistence varies between them. Trade‐offs reflect preferences and how much decision makers are willing to give up in benefits for one objective in exchange for gains in other objectives. Despite the increase of tools for exploring trade‐offs, decisions are often made without clear specification of preferences among objectives, reducing transparency and limiting clear communication of the rationale behind decisions. We used structured decision making to navigate trade‐offs between ecological objectives and management costs across three conservation reserves of protected grasslands in Victoria, Australia. The objectives included four nationally listed threatened species, two nationally listed threatened ecosystems, a group of locally threatened and rare non‐listed species and management costs. Alternative management strategies included various combinations of fire management and weed control. The consequences of alternatives were estimated using stochastic models, empirical data and expert judgment. Context dependent preferences were elicited using swing weighting from nine decision makers and stakeholders. While all species and ecosystems are valued, how they are weighted, and the resulting preferred management strategy is context dependent. Weights were variable across participants for all objectives. There was stronger alignment of weights for one of the ecosystems, Natural Temperate Grasslands, than other objectives. One of the threatened species, striped legless lizard, tended to be weighted higher than other ecological objectives, while management costs had the lowest weights. Stakeholder's weightings for objectives varied, however the influence on the rank order of management strategies was minimal. The structured approach to navigate trade‐offs identified management strategies that best address stakeholder preferences across multiple objectives. This approach offers improvements in evidence‐based decision making and provides a transparent and defensible rationale for selecting management interventions that considers all relevant objectives.

When Less is More: Subscription Traps and Context-Dependent Preferences

When Less is More: Subscription Traps and Context-Dependent Preferences

Lordosis in humans: women's accurate perceptions of men's context-dependent preferences

Semchenko and colleagues (in press) recently disentangled two evolutionary hypotheses and demonstrated that heterosexual men have mate preferences for both the morphological cue of women's lumbar curvature and the behavioral cue of back arching: Men are attracted to an intermediate degree of lumbar curvature in both short-term and long-term mating contexts, and, independent of this preference, are attracted to lordosis behavior in short-term, but not long-term, mating contexts. No research to date has investigated whether women are aware of these preferences. There are a priori reasons to expect this to be the case: An awareness of these preferences could functionally guide both appearance-enhancement and intrasexual competition strategies. Here, we tested whether women have accurate perceptions of men's preferences in the lumbar region. Across two studies (Ns = 177, 293), we found that women's perceptions align precisely with men's preferences: Women perceive men to be attracted to cues to lordosis behavior in short-term but not long-term contexts, and to be attracted to an intermediate angle of lumbar curvature independent of mating context. We hope these findings, which document previously unknown features of women's mating psychology, inspire investigations into how women might adaptively use their accurate perceptions of men's mate preferences.

Measuring and modeling context-dependent preferences for hearing aid settings

Despite having individual perceptual preferences toward sounds, hearing aid users often end up with default hearing aid settings that have no contextual awareness. However, the introduction of smartphone-connected hearing aids has enabled a rethinking of hearing aids as user-adaptive systems considering both individual and contextual differences. In this study, we aimed to investigate the feasibility of such context-aware system for providing hearing aid users with a number of relevant hearing aid settings to choose from. During normal real-world hearing aid usage, we applied a smartphone-based method for capturing participants’ listening experience and audiological preference for different intervention levels of three audiological parameters (Noise Reduction, Brightness, Soft Gain). Concurrently, we collected contextual data as both self-reports (listening environment and listening intention) and continuous data logging of the acoustic environment (sound pressure level, signal-to-noise ratio). First, we found that having access to different intervention levels of the Brightness and Soft Gain parameters affected listening satisfaction. Second, for all three audiological parameters, the perceived usefulness of having access to different intervention levels was significantly modulated by context. Third, contextual data improved the prediction of both explicit and implicit intervention level preferences. Our findings highlight that context has a significant impact on hearing aid preferences across participants and that contextual data logging can help reduce the space of potential interventions in a user-adaptive system so that the most useful and preferred settings can be offered. Moreover, the proposed mixed-effects model is suitable for capturing predictions on an individual level and could also be expanded to predictions on a group level by including relevant user features.

On the Reliability of the BDM Mechanism

The Becker-DeGroot-Marschak (BDM) mechanism is frequently used in experimental research to measure willingness-to-pay (WTP). The mechanism is very appealing given its incentive compatibility property. However, a growing body of experimental evidence finds that WTP is sensitive to the underlying price distribution of the BDM mechanism. The literature suggests that these findings can be rationalized only if subjects have context-dependent preferences. Under context-dependent preferences, the use of the BDM mechanism momentarily changes subjects’ preferences; subjects do not have incentives to report their intrinsic valuation, which is what the BDM attempts to measure, but instead they report the amount they are willing to pay after their preferences have momentarily changed. This lack of incentive compatibility would raise serious concerns about the validity of the BDM as an elicitation procedure; indeed, virtually all studies that use the BDM mechanism choose that elicitation procedure precisely for its incentive compatibility property. In this paper, we propose that an assumption of context dependence is not necessary to rationalize the aforementioned experimental findings. We provide an alternative plausible theory and experimental evidence to support it. Our theory relies on the premise that subjects need to exert effort to learn their preferences. We find that the price distribution of the BDM mechanism influences the subject’s incentives to exert effort. The results presented here are particularly appealing to the experimental research: our theory is consistent with the experimental findings that WTP is sensitive to the price distribution of the BDM mechanism while preserving the incentive compatibility property. This paper was accepted by Duncan Simester, marketing. Funding: F. Sguera acknowledges the support from the Portuguese Foundation of Science and Technology [Project UIDB/00407/2020 (CUBE)]. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2022.4409 .

Reference dependence in the demand for gasoline

Consistent with the predictions of recent behavioral models of reference- or context-dependent preferences, we find that gasoline demand in the U.S. is up to three times more elastic when prices rise above their average over the previous year than when prices fall below this average. Reference-price effects vary substantially across cities with different demographic and commuting patterns. In cities where residents drive more, gasoline demand is less elastic but exhibits greater reference dependence. We also demonstrate that the asymmetric demand response generated by reference dependence can cause total gasoline consumption over a period of time to be lower when prices are more volatile than when prices exhibit the same average level but are more stable.

Why do people seek information? The role of personality traits and situation perception.

The opportunity to learn new knowledge is ever present. How do people decide if information has sufficient value to counteract the cost of obtaining it? We proposed a conceptual model of information seeking that emphasizes how personality traits and perceptions of situations may influence motivations to seek information to explore (related to trait curiosity and openness/intellect, and situations evoking more positive emotions and opportunities for intellectual engagement) or feel safe (related to trait uncertainty intolerance and neuroticism, and situations that evoke more negative emotions). Across two studies (N = 436; N = 316), information seeking was assessed with two widely used paradigms (advance knowledge of a reward outcome and answers to trivia questions), as well as two variations of the trivia paradigm in Study 1. In all contexts, the available information was noninstrumental, having no practical utility within the context of the task. Consistent with our proposed exploration pathway, curiosity and openness/intellect predicted the choice to seek information for trivia and related stimuli, but not reward-outcome stimuli, and trivia stimuli were generally rated as more intellectually engaging, more positive, and less negative than reward-outcome stimuli. However, evidence for the safety pathway was only partially in line with predictions, with uncertainty intolerance predicting reward-outcome information seeking in Study 2 only. We consider possible modifications to our initial model and implications for information-seeking research. These studies provide a proof of concept that people display both trait- and context-dependent preferences for noninstrumental information, both of which are commonly overlooked in studies of information seeking. (PsycInfo Database Record (c) 2022 APA, all rights reserved).

Price Sensitivity and Customer Perceived Switching Costs in Business-to-Business Markets: Joint Effect on Customer Repurchase Intentions

Previous research assumes an unconditionally positive association of perceived switching costs-financial, procedural and relational-with repurchase intentions. Building on the theory of context-dependent preference formation, the authors posit price sensitivity as a contextual factor that moderates the relationship of repurchase intentions with three different types of switching costs - financial, procedural and relational. Using a large-scale dataset (N=8,588) spanning multiple industries in the B2B domain, the authors show that price sensitivity moderates these associations such that: (1) the negative association of financial switching costs with repurchase intention is stronger when price sensitivity is low, (2) the positive association of procedural switching costs with repurchase intention is stronger when price sensitivity is low and (3) the positive association of relational switching costs with repurchase intentions is stronger when price sensitivity is high. Linking repurchase intentions to actual sales underscores the practical relevance of their results.

Assessing landowners’ preferences to inform voluntary private land conservation: The role of non-monetary incentives

Private land conservation (PLC) is an increasingly recognized strategy to help address the global biodiversity crisis. Understanding landowners’ context-dependent preferences for different PLC policies is key to designing and implementing successful voluntary strategies aiming to foster participation and long-term engagement. However, funding shortfalls and diverse cultural values mean that traditional approaches such as land acquisition or payment for ecosystem services policies may not be the best approaches to increase landowners’ participation in PLC. In this study, we examine landowners’ preferences for monetary and non-monetary incentives and how these might increase participation in PLC. We also address a geographical gap in PLC literature by assessing landowners’ preferences for voluntary PLC policies in Uruguay, a country located in the Río de la Plata Grasslands ecoregion (South America), one of the most endangered and least protected biomes worldwide. This case study provides a useful test-bed of non-monetary incentives, since 96% of the land is privately owned and no voluntary PLC strategies are in place yet. Using a choice experiment, we found that landowners were more willing to engage in voluntary PLC if policies align with their values and needs. Non-monetary incentives, such as access to training and technical support, were preferred over monetary payments, highlighting opportunities to develop context-specific policies that would foster environmental stewardship and long-term engagement. Designing policies by including a diverse set of instruments, flexible contract lengths, and integrating the context-specific social and cultural characteristics underlying landowners’ identities and values, are crucial aspects for increasing participation.

Probing sulfatide-tissue lectin recognition with functionalized glycodendrimersomes.

SummaryThe small 3-O-sulfated galactose head group of sulfatides, an abundant glycosphingolipid class, poses the (sphinx-like) riddle on involvement of glycan bridging by tissue lectins (sugar code). First, synthesis of head group derivatives for functionalization of amphiphilic dendrimers is performed. Aggregation of resulting (biomimetic) vesicles, alone or in combination with lactose, demonstrates bridging by a tissue lectin (galectin-4). Physiologically, this can stabilize glycolipid-rich microdomains (rafts) and associate sulfatide-rich regions with specific glycoproteins. Further testing documents importance of heterobivalency and linker length. Structurally, sulfatide recognition by galectin-8 is shown to involve sphingosine's OH group as substitute for the 3′-hydroxyl of glucose of lactose. These discoveries underscore functionality of this small determinant on biomembranes intracellularly and on the cell surface. Moreover, they provide a role model to examine counterreceptor capacity of more complex glycans of glycosphingolipids and to start their bottom-up glycotope surface programming.

The Normalization of Consumer Valuations: Context-Dependent Preferences from Neurobiological Constraints

Consumer valuations are shaped by choice sets, exemplified by patterns of substitution between alternatives as choice sets are varied. Building on recent neuroeconomic evidence that valuations are transformed during the choice process, we incorporate the canonical divisive normalization computation into a discrete choice model and characterize how choice behaviour depends on both size and composition of the choice set. We then examine evidence for such behaviour from two choice experiments that vary the size and composition of the choice set. We find that divisive normalization more accurately captures observed behaviour than alternative models, including an example range normalization model. These results are robust across experimental paradigms. Finally, we demonstrate that Divisive Normalization implements an efficient means for the brain to represent valuations given neurobiological constraints, yielding the fewest choice errors possible given those constraints. This paper was accepted by Elke Weber, judgment and decision making.

Context-dependent preferences and retailing: Vertical restraints on internet sales

We provide an explanation for a frequently observed vertical restraint in e-commerce, namely that brand manufacturers partially or completely prohibit that retailers distribute their high-quality products over the internet. We assume that a consumer has context-dependent preferences in the sense that he overvalues a product attribute – quality or price – that stands out in the choice set. Our analysis reveals the following: If online competition determines the margin a retailer can charge at his brick-and-mortar store, he has no incentive to draw consumers’ attention to a product’s high quality. If however, the high-quality branded good is not available online, a retailer can charge a significant markup on it and this markup is higher if consumers focus on quality rather than price. Thus, a ban on online sales aligns a retailer’s incentive with the brand manufacturer’s interest to highlight its relative advantage, quality, and allows the manufacturer to charge a higher wholesale price. Consumer welfare and total welfare, however, are higher if distribution systems that prohibit internet sales are forbidden.

Comparing value coding models of context-dependence in social choice

Decision-makers consistently exhibit violations of rational choice theory when they choose among several alternatives in a set (e.g., failing to buy the best product in a set when it is presented alongside high-quality alternatives). Many of society's most significant social decisions similarly involve the joint evaluation of multiple candidates. Are social decisions subject to the same violations, and if so, what account best characterizes the nature of the violations? Across five studies, we tested whether decision-makers exhibit context-dependent preferences in hiring scenarios and past U.S. congressional race outcomes and compared different models of value coding as sources of the hypothesized context-dependence. Studies 1a, 1b, and 1d revealed that a divisive normalization value coding scheme best characterized participants' choices across a series of hiring decisions, and that participants exhibited context-dependent preferences. However, the distractor had the opposite effect of that predicted by divisive normalization once we accounted for the random effect of participant: as the value of the distractor increased, participants were more likely to hire the highest-valued candidate. In Study 2, we used a combination of archival electoral data and survey data to examine whether normalization models could explain the outcomes of congressional elections. Electoral outcomes were predicted by political candidates' inferred competence, but this time in line with the divisive normalization account. Our findings offer mixed support for a formal, neurobiologically-derived account of when and how specific alternatives exert their effects on social evaluation and choice, and highlight conditions under which high-value distractors increase versus decrease relative choice accuracy.

Selection for relative brain size affects context-dependent male preference for, but not discrimination of, female body size in guppies.

Understanding what drives animal decisions is fundamental in evolutionary biology, and mate choice decisions are arguably some of the most important in any individual's life. As cognitive ability can impact decision making, elucidating the link between mate choice and cognitive ability is necessary to fully understand mate choice. To experimentally study this link, we used guppies (Poecilia reticulata) artificially selected for divergence in relative brain size and with previously demonstrated differences in cognitive ability. A previous test in our female guppy selection lines demonstrated the impact of brain size and cognitive ability on information processing during female mate choice decisions. Here, we evaluated the effect of brain size and cognitive ability on male mate choice decisions. Specifically, we investigated the preference of large-brained, small-brained and non-selected guppy males for female body size, a key indicator of female fecundity in this species. For this, male preference was quantified in dichotomous choice tests when presented with dyads of females with small, medium and large body size differences. All types of males showed a preference for larger females but no effect of brain size was found in the ability to discriminate between differently sized females. However, we found that non-selected and large-brained males, but not small-brained males, showed a context-dependent preference for larger females depending on the difference in female size. Our results have two important implications. First, they provide further evidence that male mate choice also occurs in a species in which secondary sexual ornamentation is present only in males. Second, they show that brain size and cognitive ability have important effects on individual variation in mating preference and sexually selected traits.