Violations of procedure invariance—The case of preference reversals in monadic and competitive product evaluations

In this paper we investigate procedure invariance as a main axiom of the theory of rational choice that stipulates that the preference between options does not depend on the underlying elicitation method. In two experimental studies, we (1) elicit subjects’ preferences between options by means of the willingness to pay (WTP) for real products in a monadic evaluation (each product is assessed separately); and (2) compare the resulting preference order with the one obtained in a competitive evaluation entailing choices between equally priced products. We detect a significant number of systematic preference reversals, meaning that subjects who value products higher in the monadic design switch to other products in the competitive choice task. Although recent marketing literature on pricing research has focused mainly on monadic designs for eliciting willingness to pay for products, our results suggest that switching to a market-like environment where product choices are usually transacted in a competitive environment might create substantial preference reversals.