Article ID: | iaor20112352 |
Volume: | 38 |
Issue: | 2 |
Start Page Number: | 249 |
End Page Number: | 271 |
Publication Date: | Mar 2011 |
Journal: | Transportation |
Authors: | Masiero Lorenzo, Hensher A |
Keywords: | behaviour, decision: studies |
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.