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Preference Reversal and Expertise
Title: Preference Reversal and Expertise
Category: Literature / English
Details: Words: 529 | Pages: 2.3 (approximately 235 words/page)
Preference Reversal and Expertise
Subjects in gambling tasks that involve both choice and pricing show a pattern of responses known as preference reversal. That is, although subjects in a choice condition generally will give higher preference ratings to “safe”, high-probability/low-payoff, bets than to “longshot”, low-probability/high-payoff, bets, when they are asked in a pricing condition to generate an amount of money that they would accept to avoid the gamble altogether they tend to give higher values for longshots …showed first 75 words of 529 total…
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…showed last 75 words of 529 total…of Cl as long as that money was guaranteed. In the opposite situation where the potential payoff is the critical factor, L would be favored over H and Cl > Ch. But here, the buyout X would never be accepted because both H and L will always have a greater potential payoff. This results in an underpricing of L and of H, since Cl and Ch will not be any different than L and H respectively.
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