Given the choice between two alternatives, a person will tend to select the alternative that they value more highly. However, when you ask them how much they would pay for each alternative, they might assign a lower price to the option that they chose. Why do people change their preferences? Does the subjective value they assign to the option change?
My research suggests that yes – the subjective value that people assign to an option can change depending on whether they are making choices or assigning prices – but it is not in the way you might expect. Usually, we see people assign relatively higher prices to options with large payoffs despite it being risky or having a long delay to receipt while choosing the option with a smaller payoff that is safer or occurs sooner. With this in mind, you might expect that choices would produce more risk-aversion to assign a higher value to the safe option – however, this is the opposite of what we observe. Rather than price-induced risk-seeking, evidence suggests that when assigning prices people are more risk-averse but anchor on the value of the payoff before adjusting for risk or delay.
Related Papers:
Sokratous, K., Fitch, A. K., & Kvam, P. D. (2023). How to ask twenty questions and win: Machine learning tools for assessing preferences from small samples of willingness-to-pay prices. Journal of Choice Modelling, 48, 100418.
Smith, T., Fitch, A., Deavours, A., & Kirkpatrick, K. (2024). Active and passive waiting in impulsive choice: Effects of fixed-interval and fixed-time delays. Learning & Behavior, 1-13.
Fitch, A. & Kvam, P. D. (Accepted for publication). Cognitive Mechanisms of Subjective Value in Multi-Attribute Pricing. Psychological Review.
Kvam, P. D., Sokratous, K., Fitch, A. K., & Vassileva, J. (2025). Comparing likelihood-based and likelihood-free approaches to fitting and comparing models of intertemporal choice. Behavior Research Methods, 57(9), 1-29.
Kvam, P. D., Sokratous, K., & Fitch, A. K. (2025). Decisions among shifting choice alternatives reveal option-general representations of evidence. Psychological Review, 132(3), 528–555. https://doi.org/10.1037/rev0000500