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Do preference reversals generalise?: Results on ambiguity and loss aversion

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Do preference reversals generalise? Results on ambiguity and loss aversion. / Ball, Linden J.; Bardsley, Nicholas; Ormerod, Thomas.
In: Journal of Economic Psychology, Vol. 33, No. 1, 02.2012, p. 48-57.

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Ball LJ, Bardsley N, Ormerod T. Do preference reversals generalise? Results on ambiguity and loss aversion. Journal of Economic Psychology. 2012 Feb;33(1):48-57. doi: 10.1016/j.joep.2011.09.001

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Ball, Linden J. ; Bardsley, Nicholas ; Ormerod, Thomas. / Do preference reversals generalise? Results on ambiguity and loss aversion. In: Journal of Economic Psychology. 2012 ; Vol. 33, No. 1. pp. 48-57.

Bibtex

@article{42706e8e52d64755bc54be0b71c12a73,
title = "Do preference reversals generalise?: Results on ambiguity and loss aversion",
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 that incorporate realistic ambiguity in both payoffs and probabilities. In addition, we test a recent explanation of preference reversals by loss aversion, which would also restrict the incidence of reversals outside the lab. According to this account, reversals occur largely because the valuation task endows subject with a gamble, activating loss aversion. This contrasts with the choice task, where the reference point is pre-experiment wealth. We test this explanation by holding the reference point constant. Our evidence suggests that reversals are only slightly diminished with ambiguity. We find no evidence supporting their explanation by loss aversion. (C) 2011 Elsevier B.V. All rights reserved.",
keywords = "Preference reversals, External validity, Ambiguity, Loss aversion, CHOICE",
author = "Ball, {Linden J.} and Nicholas Bardsley and Thomas Ormerod",
year = "2012",
month = feb,
doi = "10.1016/j.joep.2011.09.001",
language = "English",
volume = "33",
pages = "48--57",
journal = "Journal of Economic Psychology",
issn = "0167-4870",
publisher = "Elsevier",
number = "1",

}

RIS

TY - JOUR

T1 - Do preference reversals generalise?

T2 - Results on ambiguity and loss aversion

AU - Ball, Linden J.

AU - Bardsley, Nicholas

AU - Ormerod, Thomas

PY - 2012/2

Y1 - 2012/2

N2 - 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 that incorporate realistic ambiguity in both payoffs and probabilities. In addition, we test a recent explanation of preference reversals by loss aversion, which would also restrict the incidence of reversals outside the lab. According to this account, reversals occur largely because the valuation task endows subject with a gamble, activating loss aversion. This contrasts with the choice task, where the reference point is pre-experiment wealth. We test this explanation by holding the reference point constant. Our evidence suggests that reversals are only slightly diminished with ambiguity. We find no evidence supporting their explanation by loss aversion. (C) 2011 Elsevier B.V. All rights reserved.

AB - 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 that incorporate realistic ambiguity in both payoffs and probabilities. In addition, we test a recent explanation of preference reversals by loss aversion, which would also restrict the incidence of reversals outside the lab. According to this account, reversals occur largely because the valuation task endows subject with a gamble, activating loss aversion. This contrasts with the choice task, where the reference point is pre-experiment wealth. We test this explanation by holding the reference point constant. Our evidence suggests that reversals are only slightly diminished with ambiguity. We find no evidence supporting their explanation by loss aversion. (C) 2011 Elsevier B.V. All rights reserved.

KW - Preference reversals

KW - External validity

KW - Ambiguity

KW - Loss aversion

KW - CHOICE

U2 - 10.1016/j.joep.2011.09.001

DO - 10.1016/j.joep.2011.09.001

M3 - Journal article

VL - 33

SP - 48

EP - 57

JO - Journal of Economic Psychology

JF - Journal of Economic Psychology

SN - 0167-4870

IS - 1

ER -