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Economic Theory of Choice and the Preference Reversal Phenomenon

Grether, David M. and Plott, Charles R. (1979) Economic Theory of Choice and the Preference Reversal Phenomenon. American Economic Review, 69 (4). pp. 623-638. ISSN 0002-8282.

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A body of data and theory has been developing within psychology which should be of interest to economists. Taken at face value the data are simply inconsistent with preference theory and have broad implications about research priorities within economics. The inconsistency is deeper than the mere lack of transitivity or even stochastic transitivity. It suggests that no optimization principles of any sort lie behind even the simplest of human choices and that the uniformities in human choice behavior which lie behind market behavior may result from principles which are of a completely different sort from those generally accepted. This paper reports the results of a series of experiments designed to discredit the psychologists' works as applied to economics.

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Additional Information:© 1979 American Economic Association. Reprinted in Recent Developments in Economic Theory of Choice and the Preference Reversal Phenomenon experimental Economics, vol.1, no. 5, pp. 131-146, edited by J. D. Hey and G. Loomes. Edward Elgar Publishing Ltd, U.K., 1993. Reprinted in Psychology Reader, by David Eckerman, Kendall/Hunt Publishing Co., Dubuque, Iowa (1993). Reprinted in Time in Economic Theory (2004), edited by Stefano Zamagni and Elettra Agliardi (part of The International Library of Critical Writings in Economics, Series Editor: Mark Blaug). Reprinted in Experiments in Environmental Economics, Volumes I and II, edited by Jason F. Shogren (2006). Part of The International Library of Environmental Economics and Policy, overall general editors of the series, Tom Tietenberg and Kathy Segerson. Professors of economics, California Institute of Technology. The financial support supplied by the National Science Foundation and the National Aeronautics and Space Administration is gratefully acknowledged. We wish to express our appreciation to Brian Binger, Elizabeth Hoffman, and Steven Matthews, who served as research assistants.
Group:Social Science Working Papers
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Social Science Working Paper152
Issue or Number:4
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Official Citation:Economic Theory of Choice and the Preference Reversal Phenomenon David M. Grether and Charles R. Plott The American Economic Review , Vol. 69, No. 4 (Sep., 1979) , pp. 623-638 Published by: American Economic Association Article Stable URL:
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:43896
Deposited On:20 Feb 2014 19:03
Last Modified:03 Oct 2019 06:12

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