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Time Preference and Preference Reversal among Experienced Subjects: The Effects of Real Payments

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  • Bohm, Peter

Abstract

Preference reversal has been frequent in tests with hypothetical, or small real, payoffs concerning lotteries as well as claims redeemable at different future dates. Preference reversal is tested here for the latter case with nontrivial payment levels and subjects likely to deal with decisions of this type. It is found that replacing hypothetical by real-payment tests reduces preference reversal rates from 62 percent to 15 percent for subjects 'predicted' to reverse preferences and that the real overall preference reversal rate (before correcting for response errors) is 19 percent , much lower than in earlier studies. Copyright 1994 by Royal Economic Society.

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  • Bohm, Peter, 1994. "Time Preference and Preference Reversal among Experienced Subjects: The Effects of Real Payments," Economic Journal, Royal Economic Society, vol. 104(427), pages 1370-1378, November.
    • Handle: RePEc:ecj:econjl:v:104:y:1994:i:427:p:1370-78
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    Cited by:

    1. Etchart-Vincent, Nathalie, 2007. "Expérimentation de laboratoire et économie : contre quelques idées reçues et faux problèmes," L'Actualité Economique, Société Canadienne de Science Economique, vol. 83(1), pages 91-116, mars.
    2. Mathieu Lefebvre & Ferdinand Vieider & Marie Villeval, 2011. "The ratio bias phenomenon: fact or artifact?," Theory and Decision, Springer, vol. 71(4), pages 615-641, October.
    3. Jeffrey Prince & Daniel Shawhan, 2011. "Is time inconsistency primarily a male problem?," Applied Economics Letters, Taylor & Francis Journals, vol. 18(6), pages 501-504.
    4. Walton Sumner & Eric Ding & Irene D. Fischer & Michael D. Hagen, 2014. "Methods for Performing Survival Curve Quality-of-Life Assessments," Medical Decision Making, , vol. 34(6), pages 787-799, August.
    5. Walton Sumner II & Robert F. Nease Jr., 2001. "Choice-Matching Preference Reversals in Health Outcome Assessments," Medical Decision Making, , vol. 21(3), pages 208-218, May.
    6. John A. List, 2004. "Young, Selfish and Male: Field evidence of social preferences," Economic Journal, Royal Economic Society, vol. 114(492), pages 121-149, January.
    7. Holgar Müller & Eike Benjamin Kroll & Bodo Vogt, 2009. "Fact or Artifact Does the compromise effect occur when subjects face real consequences of their choices?," FEMM Working Papers 09009, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    8. Cherry, Todd L. & Shogren, Jason F., 2007. "Rationality crossovers," Journal of Economic Psychology, Elsevier, vol. 28(2), pages 261-277, April.
    9. Takeuchi, Kan, 2011. "Non-parametric test of time consistency: Present bias and future bias," Games and Economic Behavior, Elsevier, vol. 71(2), pages 456-478, March.
    10. Yan-Bang Zhou & Qiang Li & Hong-Zhi Liu, 2021. "Visual attention and time preference reversals," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 16(4), pages 1010-1038, July.
    11. Berg, Joyce E. & Dickhaut, John W. & Rietz, Thomas A., 2010. "Preference reversals: The impact of truth-revealing monetary incentives," Games and Economic Behavior, Elsevier, vol. 68(2), pages 443-468, March.
    12. Müller, Holger & Benjamin Kroll, Eike & Vogt, Bodo, 2010. "“Fact or artifact? Empirical evidence on the robustness of compromise effects in binding and non-binding choice contextsâ€," Journal of Retailing and Consumer Services, Elsevier, vol. 17(5), pages 441-448.
    13. Kaisa Herne, 1999. "The Effects of Decoy Gambles on Individual Choice," Experimental Economics, Springer;Economic Science Association, vol. 2(1), pages 31-40, August.
    14. repec:cup:judgdm:v:16:y:2021:i:4:p:1010-1038 is not listed on IDEAS

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