Many times in last 40 odd years, My house looks like a cable factory. I never throw one away, what sounds terrible in one set-up will sound great in another.
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Not very often, but it can certainly happen very easily.
Strictly a judgement call in my case, but I preferred my small $500 Triangle Titus speakers to B&W P6s I owned prior that cost almost 4X as much.
Accessories (I consider wires to be accessories) are a different story. IT is hard to predict what will work best until you decide on something and try.
Yes, it happens. Infact, I have made a habit out of continually downgrading. It makes HiFi fun again. Here are just a few of my encounters: From Sota Sapphire/Signet X50 arm to ARXA with homemade arm. From Adcom 565 mono's to Fisher 15 watt tube mono's. From Proceed CDP 1 to modified Sony playstation.
Gotta ask the question: what does a "downgrade" mean really?
Cost less? No doubt even used market prices do not always indicate relative merit. So a "downgrade" in cost certainly may sound better.
Can't be that a downgrade does not sound as good. The answer would be obvious in this case. :^)
My approach to buying is to know for sure what I am after, then identify the candidates that appear most likely to meet my needs. Cost is always a consideration. IF I cannot identify a clear reason to spend more I do not.
Result over the years is I have had few cases of better sound via intentionally downgrading. I am always looking to improve for minimal cost. Its easier to take smaller steps I think and see where you land before moving ahead too far.
Haven't had the luxury of downgrading since re-entering the world of hi-fi ten years ago. Still tweaking up, but on a tightwad's budget.
That said, I agree with Schubert's comment about the effect of the room. My "best" speakers did not sound so great in my teaching/practice studio at our new place so I moved them into a "living" area. Wow--night and day! I now put "the room" on a par with the speakers as far as overall importance.