Distinguishing among models of contextually induced preference reversals.

Abstract

Previous research has demonstrated that adding a 3rd (decoy) alternative that is dominated by only 1 of the other 2 alternatives in a choice set increases the preference for the dominating alternative (J. Huber, Payne, & Puto, 1982; Tyszka, 1983). By manipulating decoys within subjects, significant preference reversals have been obtained. The processes of 3 classes of models can account for these reversals: (a) The decoy affects the weights assigned to different dimensions, (b) the decoy produces range-frequency effects on the dimensional values of the alternatives, and (c) the perception of dominance directly increases the attractiveness of the targeted alternative. The results of 3 experiments designed to test these models favored a direct effect of dominance. When a dominated decoy was added to a choice set, asymmetrical dominance was demonstrated to be a necessary and sufficient condition for producing the predicted preference reversals. Preference reversals have intrigued decision scientists in much the same way that visual illusions have captured the attention of researchers investigating visual perception. In each case, the respective cognitive system appears to operate reasonably well in the normal environment. Yet, when brought into a laboratory situation in which stimulus information can be selectively manipulated, the systems can be made to break down, resulting in behaviors (or perceptions) that sometimes defy common sense. If one focuses only on these results, it is tempting to conclude that the cognitive system is poorly designed. However, the functional adequacy of the system under normal conditions implies that this is not the case. Instead, these systemic breakdowns provide theoretical leverage for better understanding the processes that govern decision making under normal conditions. Three broad classes of preference reversals have been reported in the literature. By far, the most extensively researched of these is the task-induced preference reversal, in which preference ordering is demonstrated to differ depending on