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Bardsley, Nicholas, Ball, Linden J and Ormerod, Tom (2012) Do preference reversals generalise? Results on ambiguity and loss aversion. Journal of Economic Psychology, 33 (1). 48 - 57. ISSN 0167-4870
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Abstract
Preference reversals are frequently observed in the lab, but almost all designs use completely transparent prospects, which are rarely features of decision making elsewhere. This raises questions of external validity. We test the robustness of the phenomenon to gambles which incorporate realistic ambiguity in payoffs and probabilities. In addition, we test a recent rationalisation of preference reversals by Third Generation Prospect Theory, which would also restrict the incidence of reversals outside the lab. According to this account, reversals occur largely because the selling protocol generally used for the valuation task activates loss aversion, which is excluded by the free gift protocol of the choice task. We find that reversals are not dependent on these procedures, though they seem to be encouraged by transparency.
| Item Type: | Article |
|---|---|
| Additional Information: | NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Economic Psychology. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Economic Psychology, 33, February 2012, DOI 10.1016/j.joep.2011.09.001. |
| Keywords: | Preference Reversals, External Validity, Ambiguity, Loss Aversion |
| Schools and Departments: | School of Psychology > Psychology |
| Subjects: | B Philosophy. Psychology. Religion > BF Psychology |
| Depositing User: | Catrina Hey |
| Date Deposited: | 06 Nov 2014 15:21 |
| Last Modified: | 08 Mar 2017 08:17 |
| URI: | http://srodev.sussex.ac.uk/id/eprint/51103 |
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