On Preferring A to B, While Also Preferring B to A

On Preferring A to B, While Also Preferring B to A

Timothy Taylor 18/07/2018 5

"In the last quarter-century, one of the most intriguing findings in behavioral science goes under the unlovely name of preference reversals between joint and separate evaluations of options. The basic idea is that when people evaluate options A and B separately, they prefer A to B, but when they evaluate the two jointly, they prefer B to A." Thus, Cass R. Sunstein begins his interesting and readable paper "On preferring A to B, while also preferring B to A" (Rationality and Society 2018,  first published July 11, 2018, subscription required)

Here is one such problem that has been studied: 

Dictionary A: 20,000 entries, torn cover but otherwise like new

Dictionary B: 10,000 entries, like new

"When the two options are assessed separately, people are willing to pay more for B; when they are assessed jointly, they are willing to pay more for A." A common explanation is that when assessed separately, people have no basis for knowing if 10,000 or 20,000 words is a medium or large number for a dictionary, so they tend to focus on "new" or "torn cover." But when comparing the two, people focus on the number of words.

Here's another example, which (as Sunstein notes is "involving an admittedly outdated technology":

CD Changer A: Can hold 5 CDs; Total Harmonic Distortion = 0.003%

CD Changer B: Can hold 20 CDs; Total Harmonic Distortion = 0.01%

"Subjects were informed that the smaller the Total Harmonic Distortion, the better the sound quality. In separate evaluation, they were willing to pay more for CD Changer B. In joint evaluation, they were willing to pay more for CD Changer A." When looking at them separately, holding 20 CDs seems more more important. When comparing them, the sound quality in Total Harmonic Distortion seems more important--although most people have no basis for knowing if this difference ins sound quality would be meaningful to their ears or not.

And one more example:

Baseball Card Package A: 10 valuable baseball cards, 3 not-so-valuable baseball cards

Baseball Card Package B: 10 valuable baseball cards

"In separate evaluation, inexperienced baseball card traders would pay more for Package B than for Package A. In joint evaluation, they would pay more for Package A (naturally enough). Intriguingly, experienced traders also show a reversal, though it is less stark." When comparing them, choosing A is obvious. But without comparing them, there is something about getting all valuable cards, with no less valuable cards mixed in, which seems attractive. 

And yet another example:

Congressional Candidate A: Would create 5000 jobs; has been convicted of a misdemeanor

Congressional Candidate B: Would create 1000 jobs; has no criminal convictions

"In separate evaluation, people rated Candidate B more favorably, but in joint evaluation they preferred candidate A." When looking at them separately, the focus is on criminal history; when looking at them together, the focus is on jobs. 

And one more: 

Cause A: Program to improve detection of skin cancer in farm workers

Cause B: Fund to clean up and protect dolphin breeding locations

When people see the two in isolation, they show a higher satisfaction rating from giving to Cause B, and they are willing to pay about the same. But when they evaluate them jointly, they show a much higher satisfaction rating from A, and they want to pay far more for it." The explanation here seems to be a form of category-bound thinking, where just thinking about the dolphins generates a stronger visceral response, but when comparing directly, the humans weigh more heavily. 

One temptation in these and many other examples given by Sunstein is that joint evaluation must be more meaningful, because there is more context for comparison. But he argues strongly that this conclusion is unwarranted. He writes: 

"In cases subject to preference reversals, the problem is that in separate evaluation, some characteristic of an option is difficult or impossible to evaluate—which means that it will not receive the attention that it may deserve. The risk, then, is that a characteristic that is important to welfare or actual experience will be ignored. In joint evaluation, the problem is that the characteristic that is evaluable may receive undue attention. The risk, then, is that a characteristic that is unimportant to welfare or to actual experience will be given excessive weight."

In addition, life does not usually give us a random selection of choices and characteristics for our limited attention spans to consider. Instead, choices are defined and described by sellers of products, or by politicians selling policies. They choose how to frame issues. Sunstein writes: 

"Sellers can manipulate choosers in either separate evaluation or joint evaluation, and the design of the manipulation should now be clear. In separate evaluation, the challenge is to show choosers a characteristic that they can evaluate, if it is good (intact cover), and to show them a characteristic  that they cannot evaluate, if it is not so good (0.01 Total Harmonic Distortion). In joint evaluation, the challenge is to allow an easy comparison along a dimension that seems self-evidently important, whether or not the difference along that dimension matters to experience or to people’s lives. ... Sellers (and others) can choose to display a range of easily evaluable characteristics (appealing ones) and also display a range of others that are difficult or impossible to assess (not so appealing ones). It is well known that some product attributes are “shrouded,” in the sense that they are hidden from view, either because of selective attention on the part of choosers or because of deliberative action on the part of sellers." 

We often think of ourselves as having a set of personal preferences that are fundamental to who we are--part of our personality and self. But in many contexts, people (including me and you) can be influenced by the framing and presentation of choices. Whether the choice is between products or politicians, beware.

Homage: I ran across this article because of a discussion by Alex Tabarrok at the wonderfully engaging Marginal Revolution site. 

A version of this article first appeared on Conversable Economist.

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  • Ruth Preston

    Finally! This is the sort of article I have hoped to learn. Thank you. This explains a lot I've wondered about for years.

  • Jack Crossley

    Large corporations are the true masters of behavioral economics. They know what will make consumers behave irrationally and against their own interests and they capitalize on that.

  • Abigail Homer

    That was pretty helpful.

  • Kelly Possle

    Most ice cream vendors are happy to let people try their product before buying.

  • Daniel Hampson

    Really good article

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Timothy Taylor

Global Economy Expert

Timothy Taylor is an American economist. He is managing editor of the Journal of Economic Perspectives, a quarterly academic journal produced at Macalester College and published by the American Economic Association. Taylor received his Bachelor of Arts degree from Haverford College and a master's degree in economics from Stanford University. At Stanford, he was winner of the award for excellent teaching in a large class (more than 30 students) given by the Associated Students of Stanford University. At Minnesota, he was named a Distinguished Lecturer by the Department of Economics and voted Teacher of the Year by the master's degree students at the Hubert H. Humphrey Institute of Public Affairs. Taylor has been a guest speaker for groups of teachers of high school economics, visiting diplomats from eastern Europe, talk-radio shows, and community groups. From 1989 to 1997, Professor Taylor wrote an economics opinion column for the San Jose Mercury-News. He has published multiple lectures on economics through The Teaching Company. With Rudolph Penner and Isabel Sawhill, he is co-author of Updating America's Social Contract (2000), whose first chapter provided an early radical centrist perspective, "An Agenda for the Radical Middle". Taylor is also the author of The Instant Economist: Everything You Need to Know About How the Economy Works, published by the Penguin Group in 2012. The fourth edition of Taylor's Principles of Economics textbook was published by Textbook Media in 2017.

   

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