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Article
The role of pre-play learning in understanding and eliminating the preference reversal phenomenon
Economics Working Papers (2002–2016)
  • Younjun Kim, University of Nebraska-Lincoln
  • Elizabeth Hoffman, Iowa State University
Document Type
Working Paper
Publication Date
9-1-2015
Working Paper Number
WP #15015, September 2015
Abstract
The preference reversal phenomenon is an iconic empirical puzzle in decision theory: inconsistent preference rankings for and pricing of a low-payoff, high-probability lottery and a high-payoff, low-probability lottery. The preference reversal phenomenon has long challenged standard economic theory. We test whether pre-play learning removes preference reversals. Pre-play learning denotes ex-ante lottery learning, where subjects observe playing lotteries before making decisions. In our experiment, we find that, with pre-play learning, subjects indicate minimum willingness to sell prices for lotteries consistent with their choices, suggesting that pre-play learning removes preference reversals.
Disciplines
File Format
application/pdf
Length
50 pages
Citation Information
Younjun Kim and Elizabeth Hoffman. "The role of pre-play learning in understanding and eliminating the preference reversal phenomenon" (2015)
Available at: http://works.bepress.com/elizabeth-hoffman/2/