Preference Reversals Research Articles

Travel decision reversals paradox of competitive metro lines: The Equate-to-differentiate Theory Interpretation

Based on the equate-to-differentiate theory, this paper studies the paradox of preference reversal and choice reversal in traffic decision-making in parallel sections of Chengdu Metro Line No.2 and No.4. Travel decision reversals: preference reversals phenomenon (PRP) and choice reversals phenomenon (CRP) are found in the travel investigation for Chengdu Metro Line No.2 and No.4, and the reversals cannot be well explained by random error. Through experimental design of cautious control, the existence of these phenomena is confirmed. This paper establishes the judgment dimension system of option attributes, and designs three groups of psychological experiment in certain, uncertain and risk scenarios. Data analysis shows that PRP and CRP can be explained by the equate-to-differentiate interpretation. The phenomena of reversal are not due to the fact that preference and choice really reverses, but the variable strategic process. The equate-to-differentiate interpretation shows good consistency in the experiments and can predict and explain the preference and choice reversal of travel decision. At last, a comparative analysis which compares the results of the two models of the decision field theory is made and finally the conclusion is obtained.

Reverse Consumer Preference: A Case Study of Indian and American Shift Towards Locally Produced Beverages.

Consumer purchasing behaviour in India and the USA can be radically different in many different aspects. However, we observe clear similarities in consumer's movement away from multinational brands toward locally produced brands in the beverages. This paper presents two case studies where a reversal in consumer preference is prevalent with a greater focus on locally produced beverages. We suggest this movement based on and several factors including, cultural, nationalism with a focus on community sustainability. We also suggest with a stronger local connection between the beverages and communities; there is a built-in word of mouth marketing opportunity that provides product sustainability, increase in producer's quality of life, and stronger community networking. This paper provides an operational definition of reverse consumer preference, the disruption of national brands and suggestions for future research on the topic.

Goals or semantic constructs? Different choice setting and choice goal activation

AbstractThe researcher of this paper contributes to the literature by identifying nuances among three types of choice settings that are likely to activate choice‐related goals and their implications for product evaluation. First, the research verifies that choice settings can activate choice‐related goals, for example, simplifying a choice. Second, it is proposed and shown that choice settings activate goals, not semantic constructs. Third, this research attempts to shed light on some nuances among different choice settings, which vary in the degree of cognitive effort used to compare alternatives. The results aid in understanding how three different choice settings can activate choice‐related goals. Fourth, the research proposes that goal activation has an implication for product evaluation, offering a new perspective to preference and choice reversal literature. Five experiments were conducted to test the hypotheses.

Stochastic Choice and Preference Reversals

Preferences over risky alternatives can be elicited by different methods, including direct pairwise choices and willingness-to-accept valuations. The results are frequently at odds, casting doubts on the foundations of economics. We develop a stochastic choice model predicting when inconsistencies across elicitation methods should occur, the type of anomalies to be expected, what determines their magnitude, and whether they uncover a bias or not. While some anomalies can be traced back to individual biases, other apparent anomalies can occur in the absence of any actual behavioral bias, as a consequence of regularities in stochastic choice, risk attitudes, and experimental design. The model delivers new predictions that are confirmed in five experiments on the classical preference reversal phenomenon. Our novel empirical approach relies on utilities estimated out of sample, which allow us to test the model and also show that the bias in willingness-to-accept valuations is limited to long shots.

Uncommitted Commitment: Behavioral Strategy to Prevent Preference Reversals.

When both smaller-sooner (SS) and larger-later (LL) rewards are temporally distal, individuals frequently prefer the LL. However, because both outcomes become proximal, individuals frequently switch to preferring the SS. These preference reversals are predicted by hyperbolic delay discounting, and may model the essential challenge of self-control. Using smokers, a population known to have high rates of delay discounting, and thus more vulnerable to preference reversals, this pilot study sought to examine soft commitment as a strategy that may prevent preference reversals. Eleven smokers were assigned to an experimental commitment condition, operationalized as 3 weeks of daily commitment trials indicating preference between an SS and LL. Ten smokers were assigned to a control commitment condition. These 3 weeks were followed by 8 days of daily choice trials indicating preference between an impending SS and LL, for both experimental and control conditions. Though no overall difference of preference was observed between groups during the choice trials, hierarchical linear modeling revealed a decrease in preference for the LL over time by the control group (e.g., increasing trend of preference reversals) but no changes by the experimental group. This pilot study provides an initial indication that soft commitment can facilitate choice persistence and prevent preference reversals.

Range Utility Theory for Uncertain Cash-flows

We provide the behavioral foundations of a preference model for risky payoff streams, a broad domain having lotteries, income streams under certainty, and repeated lotteries as special cases. For an individual who cares not only about total profit at the end, but also about partial profits, a standard set of rational axioms yield Bell's (1974) discounted incremental utility model. The model captures the intuition of time as inherently uncertain. To this bedrock, we add the notion that preferences are affected by range effects. The result is a behavioral model with a broad domain and consistent with a plethora of phenomena (bias towards short payback periods, the four-fold patterns for risk and time, preference reversals for risk and time, temporal patterns of decreasing or increasing impatience, and magnitude effects).

Modeling Product Choices in a Peer Network.

Consumers are uncertain about their preferences for innovative product attributes until the first trial. They search for information as a means of reducing uncertainty and improving the likelihood that they will be satisfied with their purchase. One way to receive information is through peer networks. As a peer network is often a priori unknown, we conduct an experiment to solicit self-reported peer nominations. We compare two mechanisms through which peer networks operate: Strength of social ties and perceived peer expertise, to draw inferences regarding consumers' preference reversal after exposure to peer recommendations. Our results indicate that perceived source expertise influences preferences while the closeness of social relationships has no statistically significant impact.

Not-so Easy Listening: Roots and Repercussions of Auditory Choice Difficulty in Voice Commerce

In the context of voice shopping, fifteen experiments demonstrate that information presented by voice can be more difficult to process than the same information presented in writing. Consequently, auditory consumers who shop by voice are less able to differentiate between choice options, leading them to choose recommended items more often, but also defer choice at higher rates compared to when the options are presented visually. This auditory choice difficulty stems from greater difficulty comparing auditory options and is related to an increased burden on working memory. Because the difficulty is related to making comparisons, a joint-evaluation—where an option is considered in the context of others—is more likely to be impacted by voice presentation than a separate-evaluation, and joint versus separate preference reversals are less likely by voice. However, voice presentation can negatively affect the evaluation of even a single item when a consumer compares it against a remembered item, a common scenario in the actual marketplace for tasks such as re-orders. Describing choice options in a way that reduces the burden on memory for auditory consumers can reduce processing difficulty and its downstream consequences.

Reversal of oxycodone conditioned place preference by oxytocin: Promoting global DNA methylation in the hippocampus

Repeated exposure to the opioid agonist, oxycodone, can lead to addiction. Accumulating evidence has shown that oxytocin (OT), a neurohypophyseal neuropeptide, could reduce the abuse potential of drugs. Recent studies suggest that epigenetic regulation through DNA methylation are involved in neuroadaptations. The current study was conducted to investigate the effects of OT on oxycodone conditioned place preference (CPP) and the epigenetic mechanism of OT in the hippocampus. For induction of CPP, oxycodone (3.0 mg/kg, i. p.) was administrated to male Sprague-Dawley rats once every other day during an eight-day conditioning phase. Global 5-methylcytosine (5-mC) level was determined based on CPP procedure, including acquisition, expression, extinction and reinstatement. We also measured mRNA levels of DNA methyltransferases (Dnmts), ten-eleven translocations (Tets) and synaptic genes (Psd95, Shank2, Gap43, etc.), and determined synaptic density after restraint stress-induced reinstatement of oxycodone CPP. The results showed that OT (2.5 μg, i. c.v.) pretreatment specifically inhibited the CPP acquisition and expression, facilitated the CPP extinction, and abolished restraint stress-induced reinstatement of oxycodone CPP. OT markedly inhibited global 5-mC changes induced by oxycodone CPP in the four phases. Following restraint stress-induced reinstatement of oxycodone CPP, OT significantly increased mRNA levels of Dnmt1, decreased Tet1 mRNA, synaptic proteins and synaptic density in the hippocampus. Our study indicated that reversal of global DNA hypomethylation through OT could significantly attenuate the rewarding effects induced by oxycodone. Our results suggested that OT could be specific manipulation on oxycodone addiction.

Why Companies Bring the State Back In. The Voluntary Self-Nationalisation of the Anglo-Persian Oil Company and the Rise of ‘Governance by Government’

ABSTRACT While companies usually prefer private to hybrid governance, they sometimes transfer governance to governments. This paper assumes that this emerges from a decline in a firm’s relative market position. It tests this assumption in a two-stage qualitative analysis: First, it conducts a fuzzy-set QCA of these decisions based on BP’s Annual Company Reports. Second, it presents a process tracing of the voluntary self-nationalisation of the Anglo-Persian Oil Corporation. The paper produces three core findings: First, threats to a company’s survival enable a preference reversal in favour of governmentalisation. Second, shareholder dissatisfaction is a crucial motivator for governmentalisation. Third, managers with an entrepreneurial role-model are more sensitive to autonomy costs and more likely to opt for unconventional governance options.

The relationship between regulatory focus and the preference reversal phenomenon in risky decision making

The relationship between regulatory focus and the preference reversal phenomenon in risky decision making

Reveal Preference Reversal in Consumer Preference for Sustainable Food Products

This study investigates consumer preference for sustainable food products and finds the classic phenomenon of preference reversal. Using contingent ranking and contingent valuation methods, we investigate whether individuals’ rankings of a product are consistent with their willingness-to-pay (WTP). Results show that preference reversal exists for the evaluation of sustainable food products. Locally produced fresh produce receives the highest preference ranking, while organic products receive the highest price premium. The incidence of preference reversal is not uniformly distributed among different groups of respondents. In general, preference reversal is less frequent among respondents who are older and have a higher educational attainment. The results imply that preference reversal not only exists for subjects with explicit risks, such as the lottery, as indicated in the previous literature but also could occur for food products that consumers purchase on a regular basis in daily grocery shopping.

Income and (Ir) rational food choice

Increasing affluence is associated with increases in the variety and diversity of consumers’ diets. While this relationship likely reflects a heightened ability of consumers to satisfy unique preferences, it is also possible that higher income and food expenditure are associated with more preference instability, as the relative cost of a mistake falls with income. This paper shows that the ability to detect preference instability increases with income. In an empirical application involving almost 540,000 food choices by almost 60,000 people, 47% committed at least one preference reversal. The odds a preference reversal are 1.8 (2.5) times higher for individuals who spend at least $160/week on food at home (away from home) compared to individuals who spend less than $20/week. Individuals who commit preference reversals are less likely to rate price and are more likely to rate novelty as important food values.

Psychological reactions to human versus robotic job replacement.

Advances in robotics and artificial intelligence are increasingly enabling organizations to replace humans with intelligent machines and algorithms1. Forecasts predict that, in the coming years, these new technologies will affect millions of workers in a wide range of occupations, replacing human workers in numerous tasks2,3, but potentially also in whole occupations1,4,5. Despite the intense debate about these developments in economics, sociology and other social sciences, research has not examined how people react to the technological replacement of human labour. We begin to address this gap by examining the psychology of technological replacement. Our investigation reveals that people tend to prefer workers to be replaced by other human workers (versus robots); however, paradoxically, this preference reverses when people consider the prospect of their own job loss. We further demonstrate that this preference reversal occurs because being replaced by machines, robots or software (versus other humans) is associated with reduced self-threat. In contrast, being replaced by robots is associated with a greater perceived threat to one's economic future. These findings suggest that technological replacement of human labour has unique psychological consequences that should be taken into account by policy measures (for example, appropriately tailoring support programmes for the unemployed).

Preference Reversals in Equivalent Choices between Individuals and Policies That Affect Individuals

Across five preregistered experiments (N = 4,202), we examine whether people make systematically different choices when choosing between individuals and policies. In an admissions context, we rando...

Beyond reach: Do symmetric changes in motor costs affect decision making? A registered report

AbstractExecuting an important decision can be as easy as moving a mouse cursor or reaching towards the preferred option with a hand. But would we decide differently if choosing required walking a few steps towards an option? More generally, is our preference invariant to the means and motor costs of reporting it? Previous research demonstrated that asymmetric motor costs can nudge the decision-maker towards a less costly option. However, virtually all traditional decision-making theories predict that increasing motor costs symmetrically for all options should not affect choice in any way. This prediction is disputed by the theory of embodied cognition, which suggests that motor behavior is an integral part of cognitive processes, and that motor costs can affect our choices. In this registered report, we investigated whether varying motor costs can affect response dynamics and the final choices in an intertemporal choice task: choosing between a readily available small reward and a larger but delayed reward. Our study compared choices reported by moving a computer mouse cursor towards the preferred option with the choices executed via a more motor costly walking procedure. First, we investigated whether relative values of the intertemporal choice options affect walking trajectories in the same way as they affect mouse cursor dynamics. Second, we tested a hypothesis that, in the walking condition, increased motor costs of a preference reversal would decrease the number of changes-of-mind and therefore increase the proportion of impulsive, smaller-but-sooner choices. We confirmed the hypothesis that walking trajectories reflect covert dynamics of decision making, and rejected the hypothesis that increased motor costs of responding affect decisions in an intertemporal choice task. Overall, this study contributes to the empirical basis enabling the decision-making theories to address the complex interplay between cognitive and motor processes.

Beyond preference reversal: Distinguishing justifiability from evaluability in joint versus single evaluations

Extensive existing research has studied how decisions differ between joint evaluation (JE) and single evaluation (SE), but most of the research aims to demonstrate preference reversals between two alternatives that vary on two attributes simultaneously. Thus, extant research cannot tell whether the reversal occurs because one of the attributes has a greater effect in JE than in SE, or the other attribute has a greater effect in SE than in JE, or both. Going beyond preference reversals, this research examines options that vary on only one attribute and studies whether the single attribute has a greater effect in JE or SE. We posit that any single attribute has two underlying characteristics—evaluability (i.e., whether people can evaluate a given value of the attribute without having to compare it with other values) and justifiability (i.e., whether people believe they should base their decisions on the attribute). Whether the single attribute has a greater effect in JE or SE depends on both the attribute’s evaluability and justifiability. Specifically, (a) a high-justifiability/low-evaluability attribute (e.g., whether a candidate for a programming job has written 100 or 200 programs) has a greater effect in JE than in SE, and (b) a low-justifiability/high-evaluability attribute (e.g., whether the candidate belongs to a discriminated-against minority group) has a greater effect in SE than in JE. While the first proposition has been tested in prior research on evaluability, the second has not. Four experiments, including one in a naturally-occurring setting and another with orthogonal manipulation of evaluability and justifiability, tested and supported these propositions, especially the second.

Delayed probabilistic risk attitude: a parametric approach

Experimental studies suggest that individuals exhibit more risk aversion in choices among prospects when the payment and resolution of uncertainty are immediate relative to when it is delayed. This leads to preference reversals that cannot be attributed to discounting. When data suggest that utility is time-independent, probability weighting functions, such as those used to model prospect theory preferences, can accommodate such reversals. We propose a simple descriptive model with a two-parameter probability weighting function where one of these parameters depends on the time at which a prospect is resolved. The time-dependent parameter is responsible for the curvature of the probability weighting function and is regarded as an index of (in)sensitivity towards changes in probabilities. We provide conditions that characterize increased sensitivity towards more distant probabilities; this can account for the observed relatively less risk aversion towards delayed prospects. In our framework, the discount function is unrestricted, such that the model is compatible with empirical findings of non-constant discounting. In a simple application to bargaining we illustrate when it is advantageous for an individual to advance or delay the bargaining resolution time if an opponent displays increased sensitivity towards probability changes with delay.

Iso-risk: an analysis of risk-taking in fixed income markets

ABSTRACTWe test the hypothesis that portfolio managers trade-off variance and kurtosis in asset returns. We find empirical evidence that supports the iso-risk hypothesis using fixed income mutual fund data. Managers appear to systematically ‘swing for the fences’ when the probability of outperformance is low. This resolves previous enigmas of preference reversals and adheres to both Prospect Theory and tournament effects. The methodology developed enables reconciliation of active return metrics and managers’ total return behaviour. As the data set includes the great recession, we provide an economic interpretation of the results in light of the trade-off hypothesis.

COOPERATION IN PUBLIC GOODS GAMES PREDICTS BEHAVIOR IN INCENTIVE‐MATCHED BINARY DILEMMAS: EVIDENCE FOR STABLE PROSOCIALITY

We report the results of an experiment in which subjects completed second mover public goods game tasks and second mover binary social dilemma tasks. Each task was completed under three different incentive structures which were matched across tasks. The use of nonlinear incentive structures, along with a novel categorization method, allowed us to identify behavioral subtypes that cannot be distinguished using conventional linear incentive structures. We also examined how well behavior could be predicted across tasks. Subjects' average conditional cooperation levels showed significant cross‐task predictability and stability. However, almost a third of responses (28%) demonstrated unambiguous preference reversals across tasks. We argue that prosociality is best described as an individual‐level trait, similar to risk aversion in choice under risk. (JEL C7, C91, H41)