PREFERENCE REVERSAL, REAL-WORLD LOTTERIES, AND LOTTERY-INTERESTED SUBJECTS

Preference reversal, or choice/reservation-price inconsistency, has be en documented experimentally for certain types of lotteries. We argue that the relevance of these findings for real-world markets is uncerta in because the type of objects used cannot exist on a market and becau se the extent to which the subjects had any real interest in the objec ts is unknown. Using real-world lotteries, we have tested choice/price consistency on subjects who prefer lotteries to cash. Preference reve rsal was observed, but the frequency was much lower than in earlier ex periments. There were no differences between subjects who qualified as 'lottery interested' and those who did not.