'Irrational' stated preferences: a quantitative and qualitative investigation
Individuals' rationality has been a key issue long debated in Economics. While normative theories establish the way 'rational' consumers should behave, many empirical studies have documented numerous systematic violations of normative principles. This has led some to question the validity of classic economic models as an adequate approximation of individuals' real decision-making. This paper aims to shed more light on this debate. A stated preference choice experiment was set up to test rational choice properties. Attention was given to the extent to which satisfaction of such tests is related to both the complexity of the design, and subject characteristics. Quantitative and qualitative methods are applied. The majority of respondents passed the rationality tests. Satisfaction of the tests was sensitive to normatively irrelevant factors such as the complexity of the task and demographic characteristics. A significant proportion of those individuals who 'failed' seem to have reformulated the experiment in some way in their mental process. Implications for the design and analyses of future DCEs are discussed. Copyright © 2004 John Wiley & Sons, Ltd.
Volume (Year): 14 (2005)
Issue (Month): 3 ()
|Contact details of provider:|| Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Simonson, Itamar, 1989. " Choice Based on Reasons: The Case of Attraction and Compromise Effects," Journal of Consumer Research, Oxford University Press, vol. 16(2), pages 158-174, September.
- DeShazo, J. R. & Fermo, German, 2002. "Designing Choice Sets for Stated Preference Methods: The Effects of Complexity on Choice Consistency," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 123-143, July.
- Sugden, Robert, 1991. "Rational Choice: A Survey of Contributions from Economics and Philosophy," Economic Journal, Royal Economic Society, vol. 101(407), pages 751-785, July.
- F. Reed Johnson & Kristy E. Mathews, 2001. "Sources and Effects of Utility-Theoretic Inconsistency in Stated-Preference Surveys," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1328-1333.
- Ryan, Mandy & San Miguel, Fernando, 2000. "Testing for consistency in willingness to pay experiments," Journal of Economic Psychology, Elsevier, vol. 21(3), pages 305-317, June.
- de Palma, Andre & Myers, Gordon M & Papageorgiou, Yorgos Y, 1994. "Rational Choice under an Imperfect Ability to Choose," American Economic Review, American Economic Association, vol. 84(3), pages 419-440, June.
- Heiner, Ronald A, 1983. "The Origin of Predictable Behavior," American Economic Review, American Economic Association, vol. 73(4), pages 560-595, September.
- Chris Starmer, 2000. "Developments in Non-expected Utility Theory: The Hunt for a Descriptive Theory of Choice under Risk," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 332-382, June.
- Starmer, Chris, 1999.
"Experimental Economics: Hard Science or Wasteful Tinkering?,"
Royal Economic Society, vol. 109(453), pages 5-15, February.
- Starmer, C., 1998. "Experimental Economics: Hard Science or Wasteful Tinkering," University of East Anglia Discussion Papers in Economics 9802, School of Economics, University of East Anglia, Norwich, UK..
- Smith, Vernon L, 1991. "Rational Choice: The Contrast between Economics and Psychology," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 877-897, August.
- Earl, Peter E, 1990. "Economics and Psychology: A Survey," Economic Journal, Royal Economic Society, vol. 100(402), pages 718-755, September.
- Earl, P.E., 1990. "Economics And Psychology: A Survey," Papers 1990-04, Tasmania - Department of Economics.
- Cam Donaldson & Phil Shackley & Mona Abdalla, 1997. "Using Willingness To Pay To Value Close Substitutes: Carrier Screening for Cystic Fibrosis Revisited," Health Economics, John Wiley & Sons, Ltd., vol. 6(2), pages 145-159.
- Marisa J. Mazzotta & James J. Opaluch, 1995. "Decision Making When Choices Are Complex: A Test of Heiner's Hypothesis," Land Economics, University of Wisconsin Press, vol. 71(4), pages 500-515.
- Mandy Ryan & Fernando San Miguel, 2003. "Revisiting the axiom of completeness in health care," Health Economics, John Wiley & Sons, Ltd., vol. 12(4), pages 295-307.
- McFadden, Daniel, 1999. "Rationality for Economists?," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 73-105, December.
- Loewenstein, George, 1999. "Experimental Economics from the Vantage-Point of Behavioural Economics," Economic Journal, Royal Economic Society, vol. 109(453), pages 23-34, February.
- Johnson, F. Reed & Desvousges, William H., 1997. "Estimating Stated Preferences with Rated-Pair Data: Environmental, Health, and Employment Effects of Energy Programs," Journal of Environmental Economics and Management, Elsevier, vol. 34(1), pages 79-99, September.
- Sen, Amartya, 1993. "Internal Consistency of Choice," Econometrica, Econometric Society, vol. 61(3), pages 495-521, May.
- Norinder, Anna & Hjalte, Krister & Persson, Ulf, 2001. "Scope and scale insensitivities in a contingent valuation study of risk reductions," Health Policy, Elsevier, vol. 57(2), pages 141-153, August.
- Cameron, Trudy Ann & Poe, Gregory L. & Ethier, Robert G. & Schulze, William D., 2002. "Alternative Non-market Value-Elicitation Methods: Are the Underlying Preferences the Same?," Journal of Environmental Economics and Management, Elsevier, vol. 44(3), pages 391-425, November.
- Dolan, P. & Gudex, C. & Kind, P. & Williams, A., 1996. "Valuing health states: A comparison of methods," Journal of Health Economics, Elsevier, vol. 15(2), pages 209-231, April.
- Sutherland, H. J. & Lockwood, G. A. & Minkin, S. & Tritchler, D. L. & Till, J. E. & Llewellyn-Thomas, H. A., 1989. "Measuring satisfaction with health care: A comparison of single with paired rating strategies," Social Science & Medicine, Elsevier, vol. 28(1), pages 53-58, January.
- Tara Maddala & Kathryn A. Phillips & F. Reed Johnson, 2003. "An experiment on simplifying conjoint analysis designs for measuring preferences," Health Economics, John Wiley & Sons, Ltd., vol. 12(12), pages 1035-1047.
- Kjartan Sælensminde, 2002. "The Impact of Choice Inconsistencies in Stated Choice Studies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 23(4), pages 403-420, December.
- Foster, Vivien & Mourato, Susana, 2002. "Testing for Consistency in Contingent Ranking Experiments," Journal of Environmental Economics and Management, Elsevier, vol. 44(2), pages 309-328, September.
- Krabbe, Paul F. M. & Essink-Bot, Marie-Louise & Bonsel, Gouke J., 1997. "The comparability and reliability of five health-state valuation methods," Social Science & Medicine, Elsevier, vol. 45(11), pages 1641-1652, December. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:wly:hlthec:v:14:y:2005:i:3:p:307-322. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.