Author ' s personal copy Research Dialogue Beyond rationality : The content of preferences

The BDT literature has largely focused on demonstrations of violations of rationality (i.e. consistency) in individual decision making and has had little to say about the content of preferences. While researchers concluded that inconsistency implied preferences were constructed, some went so far as to presume that since preferences are constructed, substantive preferences do not exist prior to their revelation. In other words, they extended the findings that individuals do not always know exactly what they want to imply that consumer's do not have any substantive preferences. This clearly overstepped the bounds of the evidence, which was agnostic toward the existence of reasonably stable substantive preferences. We applaud Simonson for calling attention to this point. While we do not believe that Simonson's “inherent preferences” lead to preference orders that behave any more rationally or consistently than those studied in the BDT literature, we nevertheless join him in his call for further research into the content of preferences and make a variety of suggestions about where that research will bear most fruit. © 2008 Society for Consumer Psychology. Published by Elsevier Inc. All rights reserved. The principle of bounded rationality was the driving force behind the emergence of Behavioral Decision Theory (BDT). The field of individual decisionmakingwas consumed by the study of how choices or more precisely, preferences as revealed through choices, varied systematically from a normative benchmark provided by economic theories of consumer behavior. As we discuss next, BDT researchers in using the standard of rational preferences have focused on the origination of rationalmore than the origin of preferences. This is in line with an economic viewpoint that was indifferent to how preferences came about. The standard criterion used in the literature to define rationality of preferences is the principle of consistency (Rieskamp, Busemeyer, & Mellers, 2006) and over time, the focus shifted from a richer discussion of the rationality assumption and the implication of its violation in consumer choice to a nearly singular focus on demonstrations of inconsistency in decisions across different elicitation methods, choice contexts, situations, etc. This is the backdrop to Simonson's (2008) call for a shift in focus to what he calls inherent preferences. We agree with his call for a shift away from demonstrations of inconsistencies and toward an understanding of how preferences are formed, how they change, and how they express themselves across choice situations, but we see several challenges in incorporating Simonson's notion of inherent preferences in this endeavor. We begin by examining where BDT came from and conclude by suggesting where we think it might head. There are at least two very different assumptions that are made in standard economics that are psychologically implausible and often lead to demonstrations of inconsistency. One assumption pertains to human ability to perfectly process all information when making choices. Clearly, not even economists (any longer) believe this assumption. The psychological reality of finite processing capacity and selective processing of information suggests that the use of consistency as a sufficient benchmark to label preferences as irrational is not quite correct. Thus, inconsistency in choices due to processing constraints such as time pressure, resource depletion, or cognitive load (cf. Dhar, Nowlis, & Sherman, 2000; Percheptsova, in press; Wang, Novemsky, Dhar, & Baumeister, 2008) in our view is not clear evidence of any irrationality in underlying preferences. These inconsistencies are interesting and important as they play out in the real world but they are not evidence of the presence or absence of inherent preferences and are not discussed further. A second assumption in standard economics whose violation leads to inconsistent choices is the idea that people have comprehensive or complete preferences (i.e., the assumption of completeness or coherence requires people to have a stable Available online at www.sciencedirect.com Journal of Consumer Psychology 18 (2008) 175–178 ⁎ Corresponding author. E-mail addresses: ravi.dhar@yale.edu (R. Dhar), nathan.novemsky@yale.edu (N. Novemsky). 1057-7408/$ see front matter © 2008 Society for Consumer Psychology. Published by Elsevier Inc. All rights reserved. doi:10.1016/j.jcps. 2008.04. 004 Author's personal copy ordering over all possible alternatives). Many tests of constructed preferences in the BDT literature are based on an empirical demonstration of inconsistent ordering in relatively simple choices such that information processing constraints discussed earlier are not the source of inconsistency. We expect that violations of completeness are likely to hold even for objects or aspects for which consumers have stable inherent preferences. Hence completeness violations do not speak to the issue of inherent versus constructed preferences. For example, assuming for the moment that Simonson's preferences for a pillow or its ingredients are indeed inherent, we still expect that the exact quantity, quality, dimensions, or price paid is likely to be influenced by the context as it is extremely unlikely that Simonson's inherent preference for a pillowwill also satisfy the assumption of completeness (i.e., people cannot be expected to have a comprehensive preference order for the infinite number of possible variations in pillows). In other words, even people who inherently like pillows are extremely unlikely to have complete stability in the attribute levels representing their most desired pillow and creative researchers would be able to show inconsistent choices for these people. This is not meant as a refutation of the usefulness of inherent preferences. In fact, it would appear from his paper that Simonson would agree with this characterization. It is important to stress that evidence of construction as based on the principle of consistency says very little about whether or not people have substantive preferences. The fact that immediate context (e.g. options presented, frame, task, etc) can influence whether a consumer chooses a 1300 W Microwave for $99 or a 1500 W microwave for $129, does not imply that this same consumer does not have a very stable substantive preference for a microwave over a toaster oven. In other words, one can have a substantive preference for a microwave over a toaster oven without having a complete or consistent ordering over all possible microwave ovens. Unfortunately, the term preferences has referred to both the general content of preferences and the specific ordering that is revealed in particular choices. It is quite clear that the field has little to say about the content of preferences and that research has mainly shown how specific orderings of choice options are constructed. In summary, Simonson argues that the BDT agenda has focused on construction and de-emphasized the role and existence of inherent preferences. As pointed out above, the agenda has mainly focused on the rationality of preferences and is agnostic about the substantive content and origin of these preferences. Thus, the research program has had little to say about how these preferences come about, inherent or not, just that they are shown to manifest inconsistent ordering. Since preferences in almost every domain, regardless of their origin, are likely to violate the principle of consistency, these violations speak to the rationality assumption about preferences but have little to say about the substantive content of the preferences themselves. Thus, it is fair to say that the field has emphasized the “rational” in the term “rational preferences. ”We agree that a leap was made in the literature when scholars inferred from the demonstration of preference inconsistency that somehow it is the same as demonstrating people do not have substantive preferences. What is demonstrated by these experiments is that people do not have complete or transitive preferences. This is an important point that may have been lost with the researchers (present company included) getting caught up in their clever demonstrations of various non-normative effects. We agree with the call to put greater emphasis on understanding the substance of preferences going forward. Deconstructing construction Simonson's paper makes two important observations about the limitations of the empirical support for preference inconsistency. The first observation refers to the experimental tests that seemingly exaggerate the degree to which the ordering of preferences is constructed by examining unusual choices or tasks (perhaps in part because BDT researchers have little interest in the content of preferences). However, this is of less critical concern if one believes (as Simonson does) that people do not generally have utilities associated with specific values and that the ordering and the exact choice is influenced by the task and context even for objects where people have inherent preferences. Because the studies were not designed to shed any light on the content of preferences and because the gold standard of consistency can easily be shown to be violated for both usual and unusual tasks, this criticism is correct but not relevant to the discussion of inherent preferences. Perhaps a more important criticism related to Simonson's observation about BDT using unusual choices is that violations of consistency based on a lack of completeness were given a higher status in the BDT literature than they deserve in the understanding of consumer preferences. If repeated demonstrations of such consistency violations in a wide range of domains are uninteresting (because refuting completeness does not require such a large number of consistency violations and the content of preferences is not illuminated by these demonstrations), then a different motivation for studying them could be that it