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Imprecision as an account of the Preference Reversal Phenomenon
Journal article   Open access   Peer reviewed

Imprecision as an account of the Preference Reversal Phenomenon

D.J. Butler and G.C. Loomes
American Economic Review, Vol.97(1), pp.277-297
2007
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Abstract

Many individuals’ choices and valuations involve a degree of uncertainty/imprecision. This paper reports an experiment designed to obtain some measure of imprecision and to examine the extent to which it can explain preference reversals of two opposite forms, one of which appears not to have been reported previously. The model of imprecision we examine not only predicts both patterns but also provides an account of earlier results that are otherwise not well explained. The results suggest that any successful descriptive theory of choice and valuation will need to allow in some way for the imprecision surrounding people’s decisions.

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6 Social Sciences
6.122 Economic Theory
6.122.1287 Risk Preferences
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Economics
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Economics & Business
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