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compared and priced at the identical time. “Context effects” discuss with methods by which preferences between options rely upon what different options are in the set (contrary to “independence of irrelevant alternate options” assumptions). For example, people are typically interested in options that dominate other options . They are also drawn disproportionately to “compromise” options with attribute values that lie between these of different alternatives . All of the above findings recommend that preferences are not the predefined sets of indifference curves represented in microeconomics textbooks. They are sometimes illdefined, highly malleable, and depending on the context in which they’re elicited. Nevertheless, when required to make an economic choice—to decide on a model of toothpaste, a The hottest product high life four twenty weed leaf all over printed winter bootsautomobile, a job, or how to invest—folks do make some type of determination. Behavioral economists discuss with the process by which people make selections with illdefined preferences as “constructing preferences” (Payne, Bettman, and Johnson 1992; Slovic 1995). A theme emerging in recent research is that, although people often reveal inconsistent or arbitrary preferences, they typically obey normative rules of financial principle when it is transparent how to take action.
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