Short Article: Preference Reversals are Diminished when Gambles are Presented as Relative Frequencies

Abstract

Preference reversals are a well-documented example of suboptimal decision making. Typical preference reversals experiments have involved monetary bets presented in probability format. Research on other examples of decision making have shown that irrational or suboptimal choices are diminished or eliminated entirely when the probabilities are presented as relative frequencies (e.g., Gigerenzer & Hoffrage, 1995). The aim of the present experiment was to determine if the way in which information is presented to participants affects participants’ preferences. When the options were presented in the standard probability format 59% of participants’ preferences were reversed. However, reversals were significantly decreased in the frequency format group, with only 40% of participants’ responses being inconsistent. Although preference reversals were not eliminated when the gambles were presented as frequencies they were significantly diminished and may not be such a robust example of irrational decision making after all.