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

0.00 Avg rating0 Votes
Article ID: iaor20112352
Volume: 38
Issue: 2
Start Page Number: 249
End Page Number: 271
Publication Date: Mar 2011
Journal: Transportation
Authors: ,
Keywords: behaviour, decision: studies
Abstract:

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 has been 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.

Reviews

Required fields are marked *. Your email address will not be published.