Imprecision as an Account of the Preference Reversal Phenomenon | Zendy

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Imprecision as an Account of the Preference Reversal Phenomenon

Author(s) -

David Butler,

Graham Loomes

Publication year - 2007

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.97.1.277

Subject(s) - preference , economics , phenomenon , valuation (finance) , microeconomics , econometrics , measure (data warehouse) , preference theory , mathematical economics , computer science , epistemology , philosophy , finance , database

Many individuals' choices and valuations involve a degree of uncertainty/imprecision. This paper reports an experiment designed to obtain some measure of imprecision and to examine the extent to which it can explain preference reversals of two opposite forms, one of which appears not to have been reported previously. The model of imprecision we examine not only predicts both patterns but also provides an account of earlier results that are otherwise not well explained. The results suggest that any successful descriptive theory of choice and valuation will need to allow in some way for the imprecision surrounding people's decisions. (JEL C91, D11, D81)

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