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Revisiting reference point formation, gains–losses asymmetry and non-linear sensitivities with an emphasis on attribute specific treatment

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  • Stathopoulos, Amanda
  • Hess, Stephane

Abstract

In contrast with expected utility theory, empirical findings indicate that decision-makers are sensitive to departures from reference points rather than states. Several tests of the reference-dependent preference framework have been carried out in experimental economics, and to a smaller extent in a choice modelling setting, to date. However, these empirical applications have generally focussed on a single behavioural phenomenon using uniform modelling approaches. This paper aims to broaden existing work by presenting a multi-attribute framework, allowing contemporarily for gains–losses asymmetry, non-linearity and testing for several possible reference points. The framework is applied in the context of commuter choices and reveals important gains in model fit and further insights into behaviour compared to standard modelling approaches. Of particular relevance for future research is the functional form of fare sensitivity that varies significantly with the reference point used.

Suggested Citation

  • Stathopoulos, Amanda & Hess, Stephane, 2012. "Revisiting reference point formation, gains–losses asymmetry and non-linear sensitivities with an emphasis on attribute specific treatment," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(10), pages 1673-1689.
  • Handle: RePEc:eee:transa:v:46:y:2012:i:10:p:1673-1689
    DOI: 10.1016/j.tra.2012.08.005
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Mabit, Stefan L. & Cherchi, Elisabetta & Jensen, Anders F. & Jordal-Jørgensen, Jørgen, 2015. "The effect of attitudes on reference-dependent preferences: Estimation and validation for the case of alternative-fuel vehicles," Transportation Research Part A: Policy and Practice, Elsevier, vol. 82(C), pages 17-28.
    2. Wiktor Budziński, 2015. "The effects of non-constant marginal utility of cost for public goods valuation," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 43.
    3. repec:eee:jouret:v:90:y:2014:i:2:p:182-197 is not listed on IDEAS
    4. repec:eee:transe:v:105:y:2017:i:c:p:18-38 is not listed on IDEAS
    5. Hess, Stephane & Stathopoulos, Amanda, 2013. "A mixed random utility — Random regret model linking the choice of decision rule to latent character traits," Journal of choice modelling, Elsevier, vol. 9(C), pages 27-38.
    6. Chorus, Caspar G., 2014. "A Generalized Random Regret Minimization model," Transportation Research Part B: Methodological, Elsevier, vol. 68(C), pages 224-238.
    7. repec:kap:transp:v:45:y:2018:i:1:d:10.1007_s11116-016-9716-4 is not listed on IDEAS
    8. Xu, Xiangdong & Chen, Anthony & Kitthamkesorn, Songyot & Yang, Hai & Lo, Hong K., 2015. "Modeling absolute and relative cost differences in stochastic user equilibrium problem," Transportation Research Part B: Methodological, Elsevier, vol. 81(P3), pages 686-703.
    9. Caspar G. Chorus, 2014. "Capturing alternative decision rules in travel choice models: a critical discussion," Chapters,in: Handbook of Choice Modelling, chapter 13, pages 290-310 Edward Elgar Publishing.

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