Preference reversal in quantum decision theory

Area of Science:

• Decision Sciences
• Cognitive Psychology
• Quantum Theory

Background:

• Preference reversal is a well-documented psychological phenomenon where individuals' choices between options differ from their valuations of those same options.
• Existing models struggle to fully explain the systematic nature of preference reversal, particularly the influence of context (choosing vs. pricing).

Purpose of the Study:

• To provide a natural explanation for preference reversal using quantum decision theory.
• To identify the specific mechanisms within quantum decision theory that account for the observed biases in decision-making.

Main Methods:

• Applying quantum decision theory to model decision-making processes involving lotteries with non-negative payoffs.
• Introducing and analyzing the role of 'attraction factors' in quantum probability calculations.
• Deriving a quantitative criterion for preference reversal based on utility factors and attraction factors.

Main Results:

• Quantum decision theory, incorporating attraction factors, successfully explains preference reversal.
• Attraction factors account for why individuals prefer a certain lottery when choosing but assign it a higher price when evaluating.
• A derived quantitative criterion for preference reversal was successfully tested against experimental data.

Conclusions:

• Quantum decision theory offers a robust framework for understanding preference reversal.
• The presence of attraction factors is crucial for explaining context-dependent biases in decision-making.
• The planning paradox can be conceptualized as a form of preference reversal within this framework.