The Construction of Preference

What I read

In this article, the author traces a path of previous research towards an argument for a constructivist and situated form of decision making, focusing on the illogical preference reversal phenomenon as an indicator that traditional theories of decision making as an objective process are flawed.

The author begins by showing a disconnect in the large body of economics research around utility theory and the small body of psychological research around the topic. He indicates that most economics research views decision making as a rational activity, based on either a complete view of a problem (with all necessary information available to make a logical decision), or with incomplete information that is available but is used to maximize positive utility. This research evolved due to Simon’s perspectives on bounded rationality, where people work to satisfice—to gain positive utility, but not necessarily maximal utility. To date, then, research has indicated that decision making is more complex than an optimization process.

One phenomenon that indicates this complexity is that of preference reversal. This is the idea that, in any situation, people are inconsistent in their own decision making based on how information is presented. The example of gambling is used; when participants are asked to decide to play a given bet, they make the selection based on probability of winning or losing, but when asked to indicate how much they would offer to play a given bet, their selection is based on the amount they might win or lose. Probability and amount are swapped, yet a more traditional view of decision making should see them as static, and the inconsistency as a pattern shows that there are different rules at play for a gambler.

The author indicates that, when this form of behavior was presented to economists, they pushed back on it rather than leaned into the possibility that it might be true. They developed studies purposefully intended to discredit the theory, but their studies confirmed that the theory was true: preference reversal indicates that utility theory is incorrect.

Next, the author describes further studies to explore why preference reversals occur, and a primary factor was identified: the dependence on “payoff cues” was a main reason for preference reversal. This developed into the “scale compatibility hypothesis,” which indicates that when prices and payoffs use the same language (money), the reversal is larger than when it uses inconsistent language (winning a dinner or a trip to a movie theatre.) Another concept is described that was being researched at the same time, that led to the “prominence effect.” Researchers hypothesized that the more important attribute in a pair will play a larger role in a decision.

Different decision-making situations leverage different forms of reasoning; some use qualitative approaches, which is “cognitively easier than an explicit tradeoff.” All of this continues to reinforce the flaws in utility theory, and makes an argument for a much more constructed view of decision making—that “different frames, contexts, and elicitation procedures highlight different aspects of the options and bring forth different reasons and considerations that influence the decision… preferences are not simply read off some master list but are constructed on the spot by an adaptive decision maker.” More specifically, the construction of a decision-making frame is based on several strategies, which include “anchoring and adjustment, relying on the prominent dimension, eliminating common attributes, discarding nonessential differences, adding new attributes into the problem frame in order to bolster one alternative, or otherwise restructuring the decision problem to create dominance and thus reduce conflict and indecision.”

What I learned and what I think

I don’t know how this paper got into my ever-growing list, but I’m glad it did. It’s a great break from a direct focus on creativity, although still completely tied into the things I’m interested in learning about. Even though it’s a psychology paper, I feel a little like I’m back in the world of HCI, and it cites Herb Simon (and makes me want to revisit some of his work again, because I don’t think I really understood any of it ten/twenty/whatever years ago when I last read it.)

I didn’t realize how strongly economists felt about their early focus on utility theory and how much a researcher or theorist would go out of their way to support a perspective in the face of strong, consistent experimental research. It sort of makes sense, given the very long history of thinking about people as rational actors, but I would think the rationality would then, through introspection, relate to the conflicting evidence here. I see myself getting pulled into the same trap: I’m very convinced I’m right about measuring creativity, but there’s an awful lot of evidence that says I’m wrong.

I like the specificity provided in the analysis of experimental outcomes related to preference reversal, and the scale compatibility hypothesis also makes sense to me. And, it relates closer to real-life situations, such as buying something and encountering advertising and branding. In the context of pushing consumption on people, that’s one of the bigger takeaways a company or startup might latch onto.

I think something that seems to be getting lost in this, and always confused me with the utility theories, is the assumption that people are in any way smart, can hold multiple ideas in their head at once, understand the experimental conditions, understand basic math, and so-on. Design research continually shows that we’re just giving people too much intellectual credit.

What really has me curious, though, is the connection I’m seeing here between decision making and design problem solving. There are several times in the design process where really important decisions have to be made. One is in the initial framing of the problem, which is usually not made explicit but is driven by some form of data and an awful lot of opinions. This is mostly a collaborative thing. Another is in the context of working through a solution, such as iterating quickly on an interaction design problem through sketches or some digital sketching tool. This is mostly a private thing. And then critique, where ideas are down selected and changed, usually collaboratively and not through wholesale decisions but instead through gestures and creative direction.

The middle one is the most interesting to me. If decision making is situated (I’m firmly in that camp, almost exclusively), but iteration—creative and rapid decision making—is happening through the back-and-forth with the paper and the designer—what is being constructed and torn down? Interaction patterning is the most curious part of this. It’s the creation of something, looking at it, copying it over there, doing it again. Erasing that one. Pulling in that one. Remembering the other side of the system, the whole system. Those decisions are the ones that are interesting to me, and juxtaposing what happens when someone like Chad or Matt (or I) are able to fly through that type of activity, while a novice struggles to even make a single, subtle shift.

Maybe I’ll find my way back to the Science and Politics of the artificial again, and leave creativity for a while.