Analyzing loss aversion and diminishing sensitivity in a freight transport stated choice experiment

Masiero, Lorenzo; Hensher, David A.

doi:10.1016/j.tra.2010.03.006

Cited by 57 publications

(46 citation statements)

References 18 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Introducing nonlinearity in the reference dependence specification (models M5 and M6) increases, in general, the goodness of model fits in respect to the linear asymmetric specifications (models M3 and M4), and both specifications outperform substantially the symmetric ones (models M1 and M2). This trend confirms what was already experienced by Masiero and Hensher (2009) who analyse loss aversion and diminishing sensitivity using a subset of the present dataset (the initial scenario dataset). However, a first interesting result is provided from the comparison, within the three pairs of models, of the AIC index which in its calculation account for both a reduction in the loglikelihood and an increase in the number of parameters estimated.…”

Section: Additional Losses Prevention Hypothesissupporting

confidence: 91%

“…Regarding the symmetric model M2, the WTP measures obtained for the initial scenario are in line with previous studies (see for example, Bolis and Maggi, 2003, Zamparini and Reggiani, 2007, Maggi and Rudel, 2008. As investigated in previous studies (see for example, Hess et al, 2008;Lanz et al, 2009;Masiero and Hensher, 2009) the WTP decrease drastically when the utility function is specified according to the reference dependence assumption, which allows us to take into account for the WTA/WTP discrepancy (see, Horowitz and McConnell, 2002 …”

Section: Table 3 Adaptation Hypotheses Test (T-ratio For Null Hypothesupporting

confidence: 86%

“…On the other hand, the punctuality attribute shows an almost symmetric utility function in respect of gains and losses domains. The pattern for the initial scenario, as already illustrated by Masiero and Hensher (2009), is characterised by a weak loss aversion in the cost and time attributes, which is particularly marked for the punctuality attribute. In this context, it is relevant to emphasise the completely opposite pattern associated with the shift scenario.…”

Section: Table 3 Adaptation Hypotheses Test (T-ratio For Null Hypothementioning

confidence: 71%

“…The recent estimation of discrete choice models with a reference dependence specification has empirically reinforced the plausibility of prospect theory assumptions within the framework of reference pivoted experimental designs (see for example, Hess et al, 2008;Lanz et al, 2009;Masiero and Hensher, 2009). The utility function is expressed in terms of gains and losses around a reference alternative, without loosing the linearity in the parameters assumption underlying the Random Utility Model (McFadden, 1974).…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Shift of reference point and implications on behavioral reaction to gains and losses

Masiero

Hensher

2010

Transportation

Self Cite

View full text Add to dashboard Cite

It is widely recognized that individual decision making is subject to the evaluation of gains and losses around a reference point. The estimation of discrete choice models increasingly use data from stated choice experiments which are pivoted around a reference alternative. However, to date, the specification of a reference alternative in transport studies is fixed, whereas it is common to observe individuals adjusting their preferences according to a change in their reference point. This paper focuses on individual reactions, in a freight choice context, to a negative change in the reference alternative values, identifying the behavioural implications in terms of loss aversion and diminishing sensitivity. The results show a significant adjustment in the valuation of gains and losses around a shifted reference alternative. In particular, we find an average increase in loss aversion for cost and time attributes, and a substantial decrease for punctuality. These findings are translated to significant differences in the willingness to pay and willingness to accept measures, providing supporting evidence of respondents' behavioural reaction.

show abstract

Section: Additional Losses Prevention Hypothesissupporting

confidence: 91%

Section: Table 3 Adaptation Hypotheses Test (T-ratio For Null Hypothesupporting

confidence: 86%

Section: Table 3 Adaptation Hypotheses Test (T-ratio For Null Hypothementioning

confidence: 71%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Shift of reference point and implications on behavioral reaction to gains and losses

Masiero

Hensher

2010

Transportation

Self Cite

View full text Add to dashboard Cite

show abstract

“…Hess et al, 2008;De Borger and Fosgerau, 2008;Masiero and Hensher, 2010). An important question arises as to the determination of the reference point.…”

Section: Behavioural Process Under Investigationmentioning

confidence: 99%

Allowing for heterogeneous decision rules in discrete choice models: an approach and four case studies

2011

View full text Add to dashboard Cite

The study of respondent heterogeneity is one of the main areas of research in the eld of choice modelling. The general emphasis is on variations across respondents in relative taste parameters while maintaining the assumption of homogeneous utility maximising decision rules. While recent work has allowed for di erences in the utility speci cation across respondents in the context of looking at heterogeneous information processing strategies, the underlying assumption that all respondents employ the same choice paradigm remains. This is despite evidence in the literature that di erent paradigms work di erently well on given datasets. In this paper, we argue that such di erences may in fact extend to respondents within a single dataset. We accommodate these differences in a latent class model, where individual classes make use of di erent underlying paradigms.We present four applications using three di erent datasets, showing mixtures between standard" random utility maximisation models and lexicography based models, models with multiple reference points, elimination by aspects models and random regret minimisation models. In each of the case studies, the behavioural mixing model obtains signi cant gains in t over the base structure where all respondents are hypothesised to use the same rule. The ndings o er important further insights into the behavioural patterns of respondents. There is also evidence that what is retrieved as taste heterogeneity in standard models may in fact be heterogeneity in decision rules.

show abstract

Modelling Nonlinearities and Reference Dependence in General Practitioners' Income Preferences

et al. 2015

View full text Add to dashboard Cite

This paper tests for the existence of nonlinearity and reference dependence in income preferences for general practitioners. Confirming the theory of reference dependent utility within the context of a discrete choice experiment, we find that losses loom larger than gains in income for Norwegian general practitioners, i.e. they value losses from their current income level around three times higher than the equivalent gains. Our results are validated by comparison with equivalent contingent valuation values for marginal willingness to pay and marginal willingness to accept compensation for changes in job characteristics. Physicians' income preferences determine the effectiveness of 'pay for performance' and other incentive schemes. Our results may explain the relative ineffectiveness of financial incentive schemes that rely on increasing physicians' incomes. Copyright © 2015 John Wiley & Sons, Ltd.

show abstract

Analyzing loss aversion and diminishing sensitivity in a freight transport stated choice experiment

Cited by 57 publications

References 18 publications

Shift of reference point and implications on behavioral reaction to gains and losses

Shift of reference point and implications on behavioral reaction to gains and losses

Allowing for heterogeneous decision rules in discrete choice models: an approach and four case studies

Modelling Nonlinearities and Reference Dependence in General Practitioners' Income Preferences

Contact Info

Product

Resources

About