I never watch Larry King. If I were to have a dishonorable mention for retiree of the year, King would be it. Yet, recently while staying in a hotel, I watched nearly ten minutes of Larry King. I have other more systematic preference shifts when in different contexts. On airplanes, I almost always order tomato juice despite rarely ordering it on the ground.*
*I do remember taking a flight once in which they oddly took the drink orders before the plane left the ground. After regaining my composure, I believe I opted for no drink.
This phenomenon of changing preferences with changing environments is not limited to me. A German study found that tomato juice is incredibly popular on airplanes, for example. And, apparently, Ginger Ale is also disproportionately popular on airplanes.*
*A quick Google and Google Scholar search did not reveal anything on the hotel television preference issue. There is plenty, however, on Larry King’s awfulness.
Now, a shift to some classic economic theory: revealed preference theory holds that a consumer’s preferences are revealed by their behavior, or purchasing habits. So, if a woman usually buys two apples each week rather than two oranges, the revealed preference theorist would say that she prefers the bundle of two apples.*
*If a man were to buy the two apples on the other hand . . . Just kidding. This is not a gender-discriminating theory.
If the phenomena I discuss above are in fact generalizable, that could have some interesting implications for revealed preference theory. At first glance, we may view such findings as a critique of revealed preference theory. The fact that our preferences differ in different environments or contexts may indicate that our genuine preferences are being stifled in our typical environments. For instance, we may have a routine of ordering a Coke in restaurants, and there’s inertia to overcoming that routine. When in a different context—in the air or in another country, etc—that inertial force may lessen as we conceptualize our different drink preference as temporary.
There are several reasonable objections to this take:
First, we should not be so dismissive of routine and tradition. Choosing the same beverage every time reduces decision costs by allowing an individual to exercise no thought when choosing what beverage to purchase. Perhaps part of an individual’s preference bundle is choosing a consistent product because that individual prefers routine or tradition for whatever reason.
Second, we may not even need to defend tradition and routine. Another way of framing an individual’s different preferences in different contexts is that the individual prefers minimal diversity. So, an airplane ginger ale drinker may prefer to have ginger ale a few times each year, but certainly not every time he goes to a restaurant. His different context—the airplane, the hotel room, or somewhere else—just serves as a useful proxy: When in that different environment, the individual is reminded of his alternative preference—since he usually acts on it in this different context—and thus orders it there.
Third and similarly, there may be some rational basis for an individual having different preferences in different environments. Some theorize, for instance, that tomato juice is popular in the air because of its high salt content, which is somehow beneficial at high altitudes. TV show preferences changing in the hotel room is more difficult to explain under this theory.
Fourth, the examples I gave interestingly do not directly rely on a pricing mechanism. We generally get drinks for “free” on airplanes* and we do not pay separately to watch television shows in hotels. While interesting, this doesn’t seem particularly relevant, since 1) we are still dealing with a scarce resource (e.g. if you order the tomato juice you can’t order some other beverage as well) and 2) we should be able to come up with examples of this phenomenon with priced items as well without a hitch (e.g. purchased alcoholic beverages in airplanes).
*The cost is obviously included in the price of the airplane ticket, but we do not pay for the drink directly.
While being mindful of these objections, it may be worthwhile to think about when your preferences differ in different contexts and determine whether your current preference bundle in your standard environment is, in fact, optimal: I now occasionally order tomato juice on the ground. After very brief introspection, I determined that I will not be watching any Larry King reruns. Perhaps I’ll watch some more Charlie Rose, though.