Effects of Probability Mode on Preference Reversal

Six analysts estimated verbally and numerically the chances that specific events will occur. Sixty decision makers used each type of estimate to make binary-choice decisions and to bid for lotteries based on the events. The usual reversal of preference between choice and bidding procedures was found in the numerical condition, but the frequency of preference reversals was significantly reduced in the verbal condition. This reduction occurred because risk aversion was reduced in choice when verbal estimates were given, whereas bidding was unaffected by presentation mode. The pattern of results was predicted by and supports the hypothesis that the relative importance given to the dimensions of a prospect depends on the form in which the information is displayed.