Browsing by Author "Tversky, Amos"

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    The causes of preference reversal
    (American Economic Association, 1990) Tversky, Amos; Slovic, Paul; Kahneman, Daniel
    Observed preference reversal (PR) cannot be adequately explained by violations of independence, the reduction axiom, or transitivity. The primary cause of PR 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. PR 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. (JEL 215)
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    Compatibility Effects in Judgment and Choice
    (1990) Slovic, Paul; Griffin, Dale; Tversky, Amos
    We investigate the hypothesis that the weight of a stimulus attribute is enhanced by its compatibility with the response mode. The first section demonstrates compatibility effects in predictions of market value (Study 1) and course grades (Study 2). In each case, the weight of a stimulus attribute is greater when it matches the response scale than when it does not. The second section applies the compatibility principle to the study of choice, and investigates the hypothesis that preference reversals are caused by the fact that payoffs are weighted more heavily in pricing than in choice, as implied by compatibility. The account is supported in experiments on risky choice (Studies 3 and 5), and on time preferences (Study 4). Theoretical and practical implications of the compatibility hypothesis are discusses in the last section.