Preference reversal in quantum decision theory

Preference reversal in quantum decision theory

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We consider the psychological effect of preference reversal and showthat it finds a natural explanation in the frame of quantum decisiontheory.When people choose between lotteries with non-negative payoffs, they prefer a more certain lottery because of uncertainty aversion.But when people evaluate lottery prices, e.

g.for selling to others the right to play Inlet Filter them, they do this more rationally, being less subject to behavioral biases.This difference can be explained bythe presence of the attraction factors entering the expression of quantumprobabilities.

Only the existence of attraction factors can explain why,considering two lotteries with close Goalie - Goalie Mask - Senior utility factors, a decision maker prefers one of them when choosing, but evaluates higher the other one when pricing.We derive a general quantitative criterion for the preference reversal to occur that relates the utilities of the two lotteries to the attraction factors under choosing versus pricing and test successfully its application on experiments by Tversky et al.We also show that the planning paradox can be treated as a kind of preference reversal.