Revealed Indifference: Using Response Times to Infer Preferences

Abstract

Revealed preference is the dominant approach for inferring preferences, but it relies on discrete, stochastic choices. The choice process also produces response times (RTs) which are continuous and can often be observed in the absence of informative choice outcomes. Moreover, there is a consistent relationship between RTs and strength-of-preference, namely that people make slower decisions as they approach indifference. This relationship arises from optimal solutions to sequential information sampling problems. Here, we investigate ways in which this relationship can be used to infer preferences when choice outcomes are uninformative or unavailable. We show that RTs from a single choice problem can be enough to usefully rank people according to their preferences. Using a large number of choice problems, we are further able to recover individual utility-function parameters from RTs alone in three different choice domains. These results provide a proof of concept for a novel “method of revealed indifference”.

Keywords: Temporal Discounting, Response Times, Sequential Sampling Models, Drift-Diffusion Model, Experimental Methodology, Social Preference, Loss Aversion

JEL Classification: C91, D01, D03, D87, D81, D90