Preference reversals in equal-probability gambles: A case for anchoring and adjustment

The paper examines preference reversal in equal-probability gambles, gambles in which all payoffs have the same probability. The results indicate that for attractive gambles (gambles whose payoffs are positive) there is a higher preference for high-variance gambles when preference is inferred from pricing and rating than when it is inferred from choice, while for unattractive gambles (gambles whose payoffs are negative) there is a higher preference for high-variance gambles when preference is inferred from choice than when it is inferred from pricing. The results also indicate that in pricing, but not in choice, there is a lower preference for high-variance gambles when the subject possesses the gamble than when he or she does not possess it. The implications of these effects for various explanations of preference reversal are discussed, and it is concluded that the effects can be explained by anchoring and adjustment, but not by compatibility, prominence, expression theory, or change of process theory.