IDEAS home Printed from https://ideas.repec.org/a/eee/joreco/v19y2012i4p406-412.html
   My bibliography  Save this article

Violations of procedure invariance—The case of preference reversals in monadic and competitive product evaluations

Author

Listed:
  • Müller, Holger
  • Kroll, Eike B.
  • Vogt, Bodo

Abstract

In this paper we investigate procedure invariance as a main axiom of the theory of rational choice that stipulates that the preference between options does not depend on the underlying elicitation method. In two experimental studies, we (1) elicit subjects’ preferences between options by means of the willingness to pay (WTP) for real products in a monadic evaluation (each product is assessed separately); and (2) compare the resulting preference order with the one obtained in a competitive evaluation entailing choices between equally priced products. We detect a significant number of systematic preference reversals, meaning that subjects who value products higher in the monadic design switch to other products in the competitive choice task. Although recent marketing literature on pricing research has focused mainly on monadic designs for eliciting willingness to pay for products, our results suggest that switching to a market-like environment where product choices are usually transacted in a competitive environment might create substantial preference reversals.

Suggested Citation

  • Müller, Holger & Kroll, Eike B. & Vogt, Bodo, 2012. "Violations of procedure invariance—The case of preference reversals in monadic and competitive product evaluations," Journal of Retailing and Consumer Services, Elsevier, vol. 19(4), pages 406-412.
    • Handle: RePEc:eee:joreco:v:19:y:2012:i:4:p:406-412
    DOI: 10.1016/j.jretconser.2012.04.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969698912000446
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jretconser.2012.04.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Noussair, Charles & Robin, Stephane & Ruffieux, Bernard, 2004. "Revealing consumers' willingness-to-pay: A comparison of the BDM mechanism and the Vickrey auction," Journal of Economic Psychology, Elsevier, vol. 25(6), pages 725-741, December.
    2. Simonson, Itamar, 1989. "Choice Based on Reasons: The Case of Attraction and Compromise Effects," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 16(2), pages 158-174, September.
    3. Peter Frykblom, 2000. "Willingness to pay and the choice of question format: experimental results," Applied Economics Letters, Taylor & Francis Journals, vol. 7(10), pages 665-667.
    4. Keane, Michael, 1997. "Current Issues in Discrete Choice Modeling," MPRA Paper 52515, University Library of Munich, Germany.
    5. Franziska Voelckner, 2006. "An empirical comparison of methods for measuring consumers’ willingness to pay," Marketing Letters, Springer, vol. 17(2), pages 137-149, April.
    6. Kagel, John H & Levin, Dan, 1993. "Independent Private Value Auctions: Bidder Behaviour in First-, Second- and Third-Price Auctions with Varying Numbers of Bidders," Economic Journal, Royal Economic Society, vol. 103(419), pages 868-879, July.
    7. Hsee, Christopher K., 1996. "The Evaluability Hypothesis: An Explanation for Preference Reversals between Joint and Separate Evaluations of Alternatives," Organizational Behavior and Human Decision Processes, Elsevier, vol. 67(3), pages 247-257, September.
    8. 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.
    9. John A. List, 2002. "Preference Reversals of a Different Kind: The "More Is Less" Phenomenon," American Economic Review, American Economic Association, vol. 92(5), pages 1636-1643, December.
    10. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    11. Grether, David M & Plott, Charles R, 1979. "Economic Theory of Choice and the Preference Reversal Phenomenon," American Economic Review, American Economic Association, vol. 69(4), pages 623-638, September.
    12. Bazerman, Max H. & Moore, Don A. & Tenbrunsel, Ann E. & Wade-Benzoni, Kimberly A. & Blount, Sally, 1999. "Explaining how preferences change across joint versus separate evaluation," Journal of Economic Behavior & Organization, Elsevier, vol. 39(1), pages 41-58, May.
    13. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
    14. David M. Grether & James C. Cox, 1996. "The preference reversal phenomenon: Response mode, markets and incentives (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(3), pages 381-405.
    15. Francisca Sinn & Sandra Milberg & Leonardo Epstein & Ronald Goodstein, 2007. "Compromising the compromise effect: Brands matter," Marketing Letters, Springer, vol. 18(4), pages 223-236, December.
    16. Franziska Völckner & Julian Hofmann, 2007. "The price-perceived quality relationship: A meta-analytic review and assessment of its determinants," Marketing Letters, Springer, vol. 18(3), pages 181-196, September.
    17. Tversky, Amos & Slovic, Paul & Kahneman, Daniel, 1990. "The Causes of Preference Reversal," American Economic Review, American Economic Association, vol. 80(1), pages 204-217, March.
    18. Richard H. Thaler & Eric J. Johnson, 1990. "Gambling with the House Money and Trying to Break Even: The Effects of Prior Outcomes on Risky Choice," Management Science, INFORMS, vol. 36(6), pages 643-660, June.
    19. Reilly, Robert J, 1982. "Preference Reversal: Further Evidence and Some Suggested Modifications in Experimental Design," American Economic Review, American Economic Association, vol. 72(3), pages 576-584, June.
    20. Braga, Jacinto & Humphrey, Steven J. & Starmer, Chris, 2009. "Market experience eliminates some anomalies--and creates new ones," European Economic Review, Elsevier, vol. 53(4), pages 401-416, May.
    21. Park, Jong-Won & Hastak, Manoj, 1994. "Memory-Based Product Judgments: Effects of Involvement at Encoding and Retrieval," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 21(3), pages 534-547, December.
    22. Huber, Joel & Payne, John W & Puto, Christopher, 1982. "Adding Asymmetrically Dominated Alternatives: Violations of Regularity and the Similarity Hypothesis," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 9(1), pages 90-98, June.
    23. Peterson, Robert A, 2001. "On the Use of College Students in Social Science Research: Insights from a Second-Order Meta-analysis," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 28(3), pages 450-461, December.
    24. Hawkins, Scott A., 1994. "Information Processing Strategies in Riskless Preference Reversals: The Prominence Effect," Organizational Behavior and Human Decision Processes, Elsevier, vol. 59(1), pages 1-26, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lichters, Marcel & Wackershauser, Verena & Han, Shixing & Vogt, Bodo, 2019. "On the applicability of the BDM mechanism in product evaluation," Journal of Retailing and Consumer Services, Elsevier, vol. 51(C), pages 1-7.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Holger Müller & Eike Benjamin Kroll & Bodo Vogt, 2010. "When Judgments and Preferences Fail to Conform: Research on Preference Reversals for Product Purchases," FEMM Working Papers 100003, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    2. Holger Müller & Eike Kroll & Bodo Vogt, 2012. "Do real payments really matter? A re-examination of the compromise effect in hypothetical and binding choice settings," Marketing Letters, Springer, vol. 23(1), pages 73-92, March.
    3. 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.
    4. Sebastian Lehmann, 2014. "Toward an Understanding of the BDM: Predictive Validity, Gambling Effects, and Risk Attitude," FEMM Working Papers 150001, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    5. 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.
    6. Kaisa Herne, 1999. "The Effects of Decoy Gambles on Individual Choice," Experimental Economics, Springer;Economic Science Association, vol. 2(1), pages 31-40, August.
    7. Marcel Lichters & Marko Sarstedt & Bodo Vogt, 2015. "On the practical relevance of the attraction effect: A cautionary note and guidelines for context effect experiments," AMS Review, Springer;Academy of Marketing Science, vol. 5(1), pages 1-19, June.
    8. Franziska Voelckner, 2006. "An empirical comparison of methods for measuring consumers’ willingness to pay," Marketing Letters, Springer, vol. 17(2), pages 137-149, April.
    9. Marine Le Gall-Ely, 2009. "Définition, mesure et déterminants du consentement à payer du consommateur : synthèse critique et voies de recherche," Post-Print hal-00522826, HAL.
    10. Hammond, Peter J & Zank, Horst, 2013. "Rationality and Dynamic Consistency under Risk and Uncertainty," The Warwick Economics Research Paper Series (TWERPS) 1033, University of Warwick, Department of Economics.
    11. Christopher Y. Olivola & Stephanie W. Wang, 2016. "Patience auctions: the impact of time vs. money bidding on elicited discount rates," Experimental Economics, Springer;Economic Science Association, vol. 19(4), pages 864-885, December.
    12. Jonathan E. Alevy & John A. List & Wiktor L. Adamowicz, 2011. "How Can Behavioral Economics Inform Nonmarket Valuation? An Example from the Preference Reversal Literature," Land Economics, University of Wisconsin Press, vol. 87(3), pages 365-381.
    13. Marcel Lichters & Marko Sarstedt & Bodo Vogt, 2015. "On the practical relevance of the attraction effect: A cautionary note and guidelines for context effect experiments," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 5(1), pages 1-19, June.
    14. Kim, Younjun, 2015. "Essays on firm location decisions, regional development and choices under risk," ISU General Staff Papers 201501010800005579, Iowa State University, Department of Economics.
    15. Thomas Kourouxous & Thomas Bauer, 2019. "Violations of dominance in decision-making," Business Research, Springer;German Academic Association for Business Research, vol. 12(1), pages 209-239, April.
    16. Clark, Jeremy & Friesen, Lana, 2008. "The causes of order effects in contingent valuation surveys: An experimental investigation," Journal of Environmental Economics and Management, Elsevier, vol. 56(2), pages 195-206, September.
    17. Simonson, Itamar, 2007. "Will I Like A "Medium" Pillow? Another Look At Constructed And Inherent Preferences," Research Papers 1977r1, Stanford University, Graduate School of Business.
    18. John A. List, 2002. "Preference Reversals of a Different Kind: The "More Is Less" Phenomenon," American Economic Review, American Economic Association, vol. 92(5), pages 1636-1643, December.
    19. Sebastian Neumann-Böhme & Stefan A. Lipman & Werner B. F. Brouwer & Arthur E. Attema, 2021. "Trust me; I know what I am doing investigating the effect of choice list elicitation and domain-relevant training on preference reversals in decision making for others," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(5), pages 679-697, July.
    20. Kassas, Bachir & Palma, Marco A. & Zhang, Yvette, 2016. "The role of incentives on preference revelations in auctions versus rankings," Journal of choice modelling, Elsevier, vol. 20(C), pages 73-85.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:joreco:v:19:y:2012:i:4:p:406-412. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/journal-of-retailing-and-consumer-services .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.