Extreme malleability of preferences: Absolute preference sign changes under uncertainty

Joachim Vosgerau*, Eyal Peer

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Scopus citations

Abstract

Malleability of preferences is a central tenet of behavioral decision theory. How malleable preferences really are, however, is a topic of debate. Do preference reversals imply preference construction? We argue that to claim preferences are construed, a demonstration of more extreme preference malleability than simple preference reversals is required: absolute preference sign changes within participants. If respondents value a prospect positively in 1 condition but negatively in a different condition, preferences cannot be considered stable. Such absolute preference sign changes are possible under uncertainty. In 2 incentive-compatible experiments, we found participants were willing to pay to take part in a gamble and also demanded to be compensated to take part in a subsequent gamble with identical outcomes and probabilities. Such absolute preference sign changes within participants led to simultaneous risk aversion and risk seeking for the same risky prospect, suggesting that, at least in the domain of risky decisions, consumers' preferences are indeed malleable and construed.

Original languageAmerican English
Pages (from-to)38-46
Number of pages9
JournalJournal of Behavioral Decision Making
Volume32
Issue number1
DOIs
StatePublished - Jan 2019
Externally publishedYes

Bibliographical note

Publisher Copyright:
Copyright © 2018 John Wiley & Sons, Ltd.

Keywords

  • preference construction
  • preference reversal
  • risk preferences
  • uncertainty

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