Abstract
Numerous studies have demonstrated that theoretically equivalent measures of preference, such as choices and prices, can lead to systematically different preference orderings, known as preference reversals. Two major causes of preference reversals are the compatibility effect and the prominence effect. The present studies demonstrate that the combined effects of prominence and compatibility lead to predictable preference reversals in settings where improvements in air quality are compared with improvements in consumer commodities by two methods-willingness to pay for each improvement and choice (For which of the two improvements would you pay more? Which improvement is more valuable to you?). Willingness to pay leads to relatively greater preference for improved commodities; choice leads to relatively greater preference for improved air quality. These results extend the domain of preference reversals and pose a challenge to traditional theories of preference. At the applied level, these findings indicate the need to develop new methods for valuing environmental resources.
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This article was supported in part by Contract CR-812054 from the Environmental Protection Agency to the University of Colorado and Grant No. SES-9022952 from the National Science Foundation to the Decision Science Research Institute. Any opinions, findings, and conclusions or recommendations expressed in this article are those of the authors and do not necessarily reflect the views of either the National Science Foundation or the Environmental Protection Agency. We would like to thank William Schulze for his advice and encouragement.
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Irwin, J.R., Slovic, P., Lichtenstein, S. et al. Preference reversals and the measurement of environmental values. J Risk Uncertainty 6, 5–18 (1993). https://doi.org/10.1007/BF01065347
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DOI: https://doi.org/10.1007/BF01065347