Investigating travelers’ heterogeneous attitudes toward losses: insights from a stated preference experiment

ABSTRACT

This paper aims to investigate the heterogeneity property of travelers’ loss attitudes. Specifically, three assumptions are made: 1) travelers’ loss attitudes are attribute-specific; 2) travelers’ loss attitudes are related to their socio-demographic attributes; and 3) the reverse of loss aversion may also occur to some travelers. An ordered logit model allowing for heterogeneous loss-attitude effect is proposed, whose ability is proved by two synthetic data sets. An empirical data set based on a stated preference experiment is further collected and used to examine the three assumptions. The estimation results confirm all proposed assumptions and reveal some interesting insights about the influence of loss attitude in travelers’ choice behavior that rarely found in previous studies. In addition, an analysis of WTP/WTA involving travelers’ loss attitudes is also carried out.

KEYWORDS:

• Heterogeneous loss attitudes
• loss aversion
• loss unconcern
• ordered logit model
• stated preference experiment

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. The choice context is bus line satisfaction, the profiles generated for the stated choice experiment are adopted. The unit of in-vehicle time, wait time, walk time and transfer time are shifted from ‘minute’ to ‘hour’.

2. Because we use an exponential form to represent loss-attitude parameter, see Equation (8)(8) ${\lambda }_m=exp\left({\lambda }_{m0}+\sum _l{\lambda }_{ml}{z}_l+{\xi }_m\right),{\xi }_m\sim N\left(0,{\sigma }_m\right)$(8) , the mean of loss-attitude parameter equals $exp\left({\lambda }_{m0}+{{\sigma }_m}^2/2\right)$. Since socio-demographic attributes are effects coded, they are not considered when we talking about the average value.

3. Socio-demographic attributes also not considered here.

4. Note that there is no loss aversion nor loss unconcern effects in terms of ticket price.