Aspiration Level and the Reversal of the Preference Reversal Phenomenon

摘要

The preference reversal phenomenon (PRP) challenges the validity of nearly all descriptive decision theories. Subjects exhibiting PRP choose a P bet (with a large chance of a small gain) over a $ bet (small chance of large gain). But when asked to put buying or selling price bids on the two bets, they bid more for the $ bet. This pattern is termed P choice reversal. The opposite pattern, $ choice reversal, is rare. The following four propositions, all of which are supported by the present data, provide a new perspective on preference reversal at a more practical level: 1. The standard preference reversal pattern occurs in some instances and the opposite reversal pattern occurs in others. 2. The opposite reversal pattern is on more firm normative ground than the standard reversal pattern. 3. The processing strategy which underlies the opposite reversal pattern (satisfying based on an aspiration level) is more cognitively taxing than that which underlies the standard reversal pattern. 4. This more taxing strategy comes into play when the stakes are relatively large and motivation to make good judgments and decisions is correspondingly high.