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

  • Masiero, Lorenzo
  • Hensher, David A.

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.

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Article provided by Elsevier in its journal Transportation Research Part A: Policy and Practice.

Volume (Year): 44 (2010)
Issue (Month): 5 (June)
Pages: 349-358

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Handle: RePEc:eee:transa:v:44:y:2010:i:5:p:349-358
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  1. Danielis, Romeo & Marcucci, Edoardo & Rotaris, Lucia, 2005. "Logistics managers' stated preferences for freight service attributes," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 41(3), pages 201-215, May.
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  5. Tversky, Amos & Kahneman, Daniel, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1039-61, November.
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  8. Lorenzo Masiero & Rico Maggi, 2010. "Estimation of indirect cost and evaluation of protective measures for infrastructure vulnerability: A case study on the transalpine transport corridor," Quaderni della facoltà di Scienze economiche dell'Università di Lugano 1003, USI Università della Svizzera italiana.
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  12. Puckett, Sean M. & Hensher, David A., 2008. "The role of attribute processing strategies in estimating the preferences of road freight stakeholders," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 44(3), pages 379-395, May.
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  14. Fowkes, Tony, 2007. "The design and interpretation of freight stated preference experiments seeking to elicit behavioural valuations of journey attributes," Transportation Research Part B: Methodological, Elsevier, vol. 41(9), pages 966-980, November.
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