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The trade-off between money and travel time: A test of the theory of reference-dependent preferences
Author info | Abstract | Publisher info | Download info | Related research | Statistics Author Info De Borger, Bruno Fosgerau, Mogens Additional information is available for the following registered author(s):

Mogens Fosgerau

Abstract We formulate a model of reference-dependent preferences based on the marginal rate of substitution at the reference-point of a reference-free utility function. Using binary choices on the trade-off between money and travel time, reference-dependence is captured by value functions that are centered at the reference. The model predicts a directly testable relationship among four commonly used valuation measures (willingness to pay (WTP), willingness to accept (WTA), equivalent gain (EG) and equivalent loss (EL)). Moreover, we show that the model allows recovering the underlying [`]referencefree' value of time. Based on a large survey data set, we estimate an econometric version of the model, allowing for both observed and unobserved heterogeneity. In a series of tests of high statistical power, we find that the relationship among the four valuation measures conforms to our model and that the constraints on the parameters implied by the model are met. The gap between WTP and WTA is found to be a factor of four. Loss aversion plays an important role in explaining responses; moreover, participants are more loss averse in the time dimension than the cost dimension. We further find evidence of asymmetrically diminishing sensitivity. Finally, we show that the fraction of [`]mistakes' (in the sense that participants are observed to sometimes select dominated options), varies systematically in a way consistent with the model of reference-dependence. The results of the paper have important implications for the evaluation of infrastructure investment and pricing reforms in the transport sector. Download Info To download: If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

"Shift of reference point and implications on behavioral reaction to gains and losses. symmetric loss aversion and the willingness 2. log in to your RePEc Author Service profile.elsevier. 2010. Please report citation or reference errors to Jose. [Downloadable!] John M. RefMan. or . 2008. Fosgerau. "Competing methods for representing random taste heterogeneity in discrete choice models. Cited by: (explanations. 4.sciencedirect.com/locate/inca/622905 For technical questions regarding this item. contact: Boesdal). to pay-willingness to accept gap. you may want to look for a different version under "Related research" (further below) or search for a different version of it.es. Publisher Info Article provided by Elsevier in its journal Journal of Urban Economics. ProCite). RIS (EndNote.File URL: http://www." MPRA Paper 10038." MPRA Paper 10041. Mogens & Hess. "A comparison of prospect theory in WTP and preference space. Volume (Year): 64 (2008) Issue (Month): 1 (July) Pages: 101-115 Download reference. if you are the registered author of the cited work. RSS feed. Rose & Lorenzo Masiero. Germany." Quaderni della facoltà di Scienze economiche .Barrueco@uv. University Library of Munich. 2008. BibTeX. Biblioteca universitaria di Lugano (University Library of Lugano). "Hedonic preferences. 3. [Downloadable!] Lorenzo Masiero & David A. ReDIF Handle: RePEc:eee:juecon:v:64:y:2008:i:1:p:101-115 Contact details of provider: Web page: http://www. Hensher.com/science/article/B6WMG-4PPW6XV1/2/fbcce0f9775bd1b2af5b5284bddd66d3 File Format: File Function: Download Restriction: Full text for ScienceDirect subscribers only dow nload the selected file As the access to this document is restricted. Germany.com (Heidi Related research Keywords: Reference-dependence Loss aversion WTP-WTA gap Value of time. plain text (with abstract). The following formats are available: HTML (with abstract).) 1." Quaderni della facoltà di Scienze economiche dell'Università di Lugano 1006. repec@elsevier. Mogens. or to correct its listing. University Library of Munich. 2010. Stephane. click on "citations" and make appropriate adjustments. [Downloadable!] Fosgerau.

which displays the same data as IDEAS in a different way. [Downloadable!] Statistics Access and download statistics Did you know? You may want to explore EconPapers.dell'Università di Lugano 1005. Biblioteca universitaria di Lugano (University Library of Lugano). College of Liberal Arts and Sciences. University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics. This page was last updated on 2010-11-4. . This information is provided to you by IDEAS at the Department of Economics.

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