Preference Reversals in Willingness-to-Pay and Choice

52 Pages Posted: 27 Apr 2017 Last revised: 13 Jul 2018

Michael O'Donnell

University of California, Berkeley - Marketing Group

Ellen Evers

UC Berkeley, Haas

Date Written: March 28, 2018

Abstract

A fundamental contribution of consumer behavior research is to help marketing scholars develop an understanding of how people think about and express their preferences. In this report we find that two commonly used preference elicitation procedures, willingness-to-pay and choices, are consistently associated with different expressed preferences. Specifically, choices are associated with a relatively greater preference for hedonic goods while WTP is associated with a relatively greater preference for utilitarian goods. We find that this is caused, in part, by the greater reliance on deliberation in determining WTP values, while preferences in choices are determined by an affect heuristic. Unlike other choices and WTP preference reversals, we find that this effect is not caused by mechanical determinants such as scale compatibility, as the effect persists with continuous scale measures that rely on affect and with choice-based scale measures that rely on determining valuation.

Keywords: choices, willingness-to-pay, preferences, judgment and decision-making, affect, deliberation

Suggested Citation

O'Donnell, Michael and Evers, Ellen, Preference Reversals in Willingness-to-Pay and Choice (March 28, 2018). Available at SSRN: https://ssrn.com/abstract=2959609 or http://dx.doi.org/10.2139/ssrn.2959609

Michael O'Donnell (Contact Author)

University of California, Berkeley - Marketing Group ( email )

Haas School of Business
Berkeley, CA 94720
United States

Ellen Evers

UC Berkeley, Haas ( email )

Haas School of Business
Berkeley, CA 94720
United States

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