Cognitive Mechanisms of Subjective Value in Multi-Attribute Pricing

Understanding how people assign subjective value to outcomes with multiple attributes, such as risk and delay, is central to understanding the structure and manifestation of economic preferences. However, multi-attribute preference has been primarily studied through binary choices. The price at which a person would buy, sell, or equate each prospect offers another measure of subjective value that may diverge from multi-attribute choice. In both risky and intertemporal domains, choice and price preferences exhibit systematic preference reversals, where a smaller, sooner, or safer option is chosen while a larger, later, or riskier alternative is assigned a higher price. The present study takes a deep dive into how subjective value is assigned in each case in an attempt to reconcile these diverging measurements and methods of assessing value. To explain how and why preferences change across choice and price, the domains of gains and losses, price frames of buying and selling, and varying levels of time pressure, we develop a unified dynamic modeling approach equipped with the flexibility to test cognitive mechanisms that may contribute to value-based judgments and decisions. Using a neural network-based approach to posterior parameter estimation and switchboard model comparison, we evaluate for each participant whether changes across conditions can be ascribed to anchoring, response caution, probability weighting, and/or delay discounting. While these mechanisms are common to both pricing and choice models, our results suggest that they differ across elicitation procedure: people anchored on the payoff and showed greater sensitivity to large payoffs in pricing compared to choice.