IDEAS home Printed from https://ideas.repec.org/a/iec/inveco/v32y2008i2p231-255.html
   My bibliography  Save this article

Testing reference dependence, loss aversion and diminishing sensitivity in Spanish tourism

Author

Listed:
  • Juan L. Nicolau

    (Universidad de Alicante)

Abstract

Based on Tversky and Kahneman’s Prospect Theory, we test the existence of reference dependence, loss aversion and diminishing sensitivity in Spanish tourism. To do this, we incorporate the reference-dependent model into a Multinomial Logit Model with Random Parameters -which controls for heterogeneity- and apply it to a sample of vacation choices made by Spaniards. We find that the difference between reference price and actual price is considered to make decisions, confirming that reference dependence exists; that people react more strongly to price increases than to price decreases relative to their reference price, which represents evidence in favor of the loss aversion phenomenon; and that there is diminishing sensitivity for losses only, showing convexity for these negative values.

Suggested Citation

  • Juan L. Nicolau, 2008. "Testing reference dependence, loss aversion and diminishing sensitivity in Spanish tourism," Investigaciones Economicas, Fundación SEPI, vol. 32(2), pages 231-255, May.
  • Handle: RePEc:iec:inveco:v:32:y:2008:i:2:p:231-255
    as

    Download full text from publisher

    File URL: ftp://ftp.fundacionsepi.es/InvEcon/paperArchive/may2008/v32i2a4.pdf
    File Function: Full text
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ahrens, Steffen & Pirschel, Inske & Snower, Dennis J., 2017. "A theory of price adjustment under loss aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 78-95.
    2. repec:eee:touman:v:46:y:2015:i:c:p:375-385 is not listed on IDEAS
    3. repec:eee:touman:v:65:y:2018:i:c:p:55-68 is not listed on IDEAS

    More about this item

    Keywords

    Prospect theory; tourism prices.;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iec:inveco:v:32:y:2008:i:2:p:231-255. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Isabel Sánchez-Seco). General contact details of provider: http://www.fundacionsepi.es/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.