Preference Reversals

Sabrina Bruyneel

Preference reversals refer to the observation that there are systematic changes in people's preference order between options. Preference order refers to an abstract relation between two options. It is assumed that when an individual is presented with options A and B, he or she either prefers A to B or prefers B to A (or is indifferent between A and B). Systematic changes refer to the observation that people exhibit different or even reverse preferences for the same options in normatively equivalent evaluation conditions (i.e., conditions that differ at first sight but in which the options that people are presented with have essentially remained the same). The preference reversal phenomenon was first observed in the late 1960s and the early 1970s by Sarah Lichtenstein and Paul Slovic in a gambling context. They observed that if people are asked to choose between a relatively safe bet with a low payoff and ...

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