Chapter 104 Preference Reversals Study of preference reversals originated with cognitive psychologists and has spread to experimental economics because it is directly relevant to the empirical validity of economic theories of decision making under uncertainty. A preference reversal experiment involves paired choice and valuation responses usually over simple two outcome gambles. Subjects are asked to choose which of a pair of gambles they want to play. They are also asked to place minimum selling prices on the gambles in an experimental context in which telling the truth is a dominant strategy. A preference reversal occurs when a subject places a lower selling price on the gamble that he she chooses than on the other gamble in a pair. Preference reversals call into question the empirical validity of economic theory because they provide support for the conclusion that the preferences that subjects reveal vary with the response mode (choice or valuation) that is used to elicit the preferences.