Reversals of preference between bids and choices in gambling decisions.

Subjects in 3 experiments chose their preferred bet from pairs of bets, and later bid for each bet separately.In each pair, one bet had a higher probability of winnirig.(Pbet); the other offered more to win (S bet).Bidding method (selling vs. buying) and payoff method (realplay vs. hourly wage) were varied.Results showed that when the P bet was chosen, the$ bet o~en received a higher bid.These inconsistencies violate every risky decision model, but can be understood via informationprocessing considerations.In bidding, S starts with amount to win and adjusts it downward to account for other attributes of the bet.In choosing, there is no natural starting point.Thus amount to win dominates , bids but not choices.One need not call this behavior irrational, but it casts doubt on the descriptive validity of expected utility models of risky decision making.