Extreme malleability of preferences: Absolute preference sign changes under uncertainty

Abstract

Malleability of preferences is a central tenet of behavioral decision theory. How malleable preferences really are, however, is a topic of debate. Do preference reversals imply preference construction? We argue that to claim preferences are construed, a demonstration of more extreme preference malleability than simple preference reversals is required: absolute preference sign changes within participants. If respondents value a prospect positively in 1 condition but negatively in a different condition, preferences cannot be considered stable. Such absolute preference sign changes are possible under uncertainty. In 2 incentive-compatible experiments, we found participants were willing to pay to take part in a gamble and also demanded to be compensated to take part in a subsequent gamble with identical outcomes and probabilities. Such absolute preference sign changes within participants led to simultaneous risk aversion and risk seeking for the same risky prospect, suggesting that, at least in the domain of risky decisions, consumers' preferences are indeed malleable and construed.