Preference reversal

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People place higher value on one option compared to a several options when looking at them individually. When considering two or more options, individuals reverse their preferences (Bazerman et. al., 1992).

Hsee experiment

Hsee (1998) asked research participants to evaluate two dictionaries. A large dictionary with 20,000 words and torn cover and intact (not damaged) dictionary with 10,000 words and intact cover. Participants then had to indicate how much they would be willing to pay for each dictionary.

Then people evaluated both dictionaries at the same time, they valued large dictionary for $27 and intact for $19. However, then they pursued individual evaluations, participants valued large dictionary for $20 and intact one for $24.

Kahneman and Ritov experiment

People are also inconsistent choosing between different types of environmental and social issues. Kahneman and Ritov (1994) presented participants with newspaper headlines that highlighted particular problems. They asked some individuals to report the level of support for government intervention in one particular cause (separate conditions). In contrast, researchers asked other participants to choose between the two causes stating which one they would support more (joint conditions).

Separate evaluations appears to be consistent with affect heuristics. People lean towards “affectively arousing” environmental causes – those that trigger strong emotions (e.g. coral reefs damaged with toxic spills).When choosing between several options (joint condition), people tend to prefer cause directly relevant to people e.g. skin cancer.

This shows inconsistencies in preference across joint and separate evaluations. One attribute is preferred in a separate evaluation and other in a joint evaluation.

Explanation

Affect heuristics

People go to their gut response, primarily paying attention to the attribute that creates emotional arousal. The more effectively arousing option (“want” option) is valued more highly in separate situations. The more logical and reasoned option (“should” option) is valued more highly in joint evaluations. People think of the affectively arousing option as the option that they “want” and consider the more logical option as the option they believe they “should” choose.

We often act on our affective preferences when assessing one option at a time, but joint assessment triggers more reasoned analysis. Therefore, System 1 is more prevalent in separate evaluations and System 2 in joint situations (Bazerman et. al., 1998).

Evaluability hypothesis

Separate and joint preferences are driven by differences in the ability of attributes to be evaluated (i.e. on their “evaluability”). This is a more cognitive explanation. Attributes that are hard to evaluate will be underweight in separate evaluations.

When two options require trade-offs between hard-to-evaluate (e.g. number of words) and easy-to-evaluate (e.g. torn cover), the hard-to-evaluate attribute will have less impact in separate evaluations than in joint evaluations.

In separate evaluations, people have difficulty assessing the desirability of an option based on hard-to-evaluate attribute (e.g. number of words). As a result, the hard-to-evaluate attribute has little influence on decision making. In joint evaluations, heaving comparison data on the hard-to-evaluate attribute for both options provides additional valuation and increases attribute’s availability.

Therefore, the number of words has more meaning when comparing two options, but you do not need comparative information to know that torn cover is undesirable.

Bazerman, M.H. and Moore, D.A., 1994. Judgment in managerial decision making (p. 226). New York: Wiley.

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