publication . Part of book or chapter of book . Article . 1990

The Causes of Preference Reversal

Amos Tversky; Paul Slovic; Daniel Kahneman;
Open Access
  • Published: 01 Jan 1990
  • Publisher: Cambridge University Press
Observed preference reversal cannot be adequately explained by violations of independence, the reduction axiom, or transitivity. The primary cause of preference reversal is the failure of procedure invariance, especially the overpricing of low-probability, high-payoff bets. This result violates regret theory and generalized (nonindependent) utility models. Preference reversal and a new reversal involving time preferences are explained by scale compatibility, which implies that payoffs are weighted more heavily in pricing than in choice. Copyright 1990 by American Economic Association.
Persistent Identifiers
arXiv: Computer Science::Computer Science and Game Theory
free text keywords: Economics, Framing effect, Transitive relation, Axiom, Intransitivity, Mathematical economics, One stage, Regret, Axiom independence, Ordinal number
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