Are Preference Reversals Due to Decision Contexts or Elicitation Procedures? A Theoretical Reconciliation

48 Pages Posted: 28 Aug 2021

See all articles by Chang-Yuan Lee

Chang-Yuan Lee

Boston University

Nina Mazar

Boston University - Questrom School of Business

Carey Morewedge

Boston University, Questrom School of Business

Date Written: April 22, 2021

Abstract

Preference reversals across decision contexts (e.g., acquisition versus forfeiture) and elicitation procedures (e.g., choice versus willingness-to-pay; WTP) provide foundational evidence that consumers’ preferences are constructed––not revealed––in the decision-making process. We examine the interplay of decision context and elicitation effects. We find that preference reversals are mostly driven by decision context effects on choice, not on preference elicitations requiring monetary valuation, like WTP. In three classic paradigms––intertemporal tradeoffs, acquisition versus forfeiture, and the attraction effect––decision-context effects more often induced preference reversals when preferences were elicited through choice than when preferences were elicited through Willingness-to-Pay or Willingness-to-Accept (WTP/WTA), even with real money at stake. Preference reversals between decision contexts were less prevalent in WTP/WTA than in choice because attribute compatibility effects made market relevant attributes, that is, value relevant information, more salient and weighted heavily in WTP/WTA than in choice. The results (eight experiments; N=3,544) change our understanding of preference reversals and challenge the use of choice as the gold standard for preference elicitation.

Keywords: context-dependent preferences, biases, preference consistency, preference elicitation

JEL Classification: D00

Suggested Citation

Lee, Chang-Yuan and Mazar, Nina and Morewedge, Carey, Are Preference Reversals Due to Decision Contexts or Elicitation Procedures? A Theoretical Reconciliation (April 22, 2021). Boston University Questrom School of Business Research Paper No. 3912207, Available at SSRN: https://ssrn.com/abstract=3912207 or http://dx.doi.org/10.2139/ssrn.3912207

Chang-Yuan Lee (Contact Author)

Boston University ( email )

595 Commonwealth Ave.
Boston, MA 02215
United States

Nina Mazar

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States

Carey Morewedge

Boston University, Questrom School of Business ( email )

595 Commonwealth Ave
614, Marketing Department
Boston, MA 02215
United States

HOME PAGE: http://careymorewedge.com

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
36
Abstract Views
258
PlumX Metrics