Revisiting constructed preferences: Extrapolating preferences from relevant reminders

Bias and error are considered fundamental characteristics of preferences. However, daily behavior frequently demonstrates preference coherence. We link the leading notions of constructed preferences and well-defined values (Payne, Bettman & Schkade, 1999) and the demonstration of coherent arbitrariness (Ariely, Loewenstein & Prelec, 2003) and suggest that they describe a general process where people construct preferences from a starting point. We focus on an intermediate case where people extrapolate coherent preferences from relevant reminders. In 4 studies we characterize the unique features of extrapolated preferences and compare them to preferences built from scratch. Our findings show that the process of extrapolation follows linearity rather than diminished sensitivity (Study 1), leads to fewer errors, thus resulting in more consistent preference sets (Study 2), reduces cognitive effort as the quality of the starting point increases (Study 3), and helps to maintain transitivity by prioritizing ordered preferences over direct but noisy experience (Study 4). We discuss the advantages of extrapolated preferences in terms of coherence, but also highlight their potential drawbacks in terms of compromising authentic experience.

Duke Scholars

Author Dan Ariely Fuqua School of Business