Weighting the Evidence: A Rank-Dependent Model of Outdoor Recreation

Jorge Holzer and Kenneth McConnell

Journal of the Association of Environmental and Resource Economists, 2025, vol. 12, issue 3, 599 - 636

Abstract: Outdoor recreation is among the most popular leisure activities in the world. As it takes place in an uncertain environment, agents incur travel costs to discover the payoff only after arriving at the site. Building on recent developments in behavioral economics suggesting a variety of patterns of behavior inconsistent with expected utility, we specify recreationists’ preferences as rank-dependent. Using data from a 2022 stated preference survey in the East Coast summer flounder recreational fishery, our results confirm that previous empirical findings can be applied to the domain of recreation. As in the case of financial, insurance, and medical decisions, our subjects exhibit a pattern of probability weights consistent with an inverse S-shaped probability weighting function that overweights small-tail probabilities and underweights intermediate and large probabilities. Our results have important implications for the management of outdoor recreation. Finally, we illustrate how our model could be estimated using revealed rather than stated preference data.

Date: 2025
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