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

Lorenzo Masiero and David Hensher

Quaderni della facoltà di Scienze economiche dell'Università di Lugano from USI Università della Svizzera italiana

Abstract: Choice behaviour might be determined by asymmetric preferences whether the consumers are faced with gains or losses. This paper investigates loss aversion and diminishing sensitivity, and analyzes their implications on willingness to pay and willingness to accept measures in a reference pivoted choice experiment in a freight transport framework. The results suggest a significant model fit improvement when preferences are treated as asymmetric, proving both loss aversion and diminishing sensitivity. The implications on willingness to pay and willingness to accept indicators are particular relevant showing a remarkable difference between symmetric and asymmetric model specifications. Not accounting for loss aversion and diminishing sensitivity, when present, produces misleading results and might affect significantly the policy decisions.

Keywords: freight transport; choice experiments; willingness to pay; preference asymmetry (search for similar items in EconPapers)
JEL-codes: C25 L91 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2010-03
New Economics Papers: this item is included in nep-dcm, nep-exp, nep-upt and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (48)

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Related works:
Journal Article: Analyzing loss aversion and diminishing sensitivity in a freight transport stated choice experiment (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:lug:wpaper:1004

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