Preference reversal and expert
Preference reversal and expertSubjects in gambling tasks that involve both choice and pricing show a pattern of responses known as preference reversal. That is, although subjects in a choice condition generally will give higher preference ratings to “safe”, high-probability/low-payoff, bets than to “longshot”, low-probability/high-payoff, bets, when they are asked in a pricing condition to generate an amount of money that they would accept to avoid the gamble altogether they tend to give higher values for longshots over safer bets. Tversky, Slovic, and Kahneman (1990) demonstrate that among the several possible actions that subjects could be taking to produce this pattern, the critical factor appears to be the overpricing of the longshot bets. If subjects are actually offered a monetary figure (hypothetically) by the experimenter to replace the gamble, they will accept this figure even though it is lower than the figure that they generated in the pricing condition. Tversky et al. (1990) further showed that this overpricing is largely due to a phenomena known as scale compatibility, which involves certain biases when the response required by the subject is in the same units as the factors influencing the decision. Since the payoffs of the bets and the buy-out prices assigned to them are both monetary values, this leads people to give greater weight to the payoff value of the bets when asked to price them (a situation of compatibility) than when asked to choose between them (a situation of non-compatibility).
The development of expertise in avoiding preference reversal, then, would have to involve the circumvention of the compatibility effect. One possible way in which this could...
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