Abstract
Several laboratory experiments and market-based research in the fields of psychology, economics and marketing have provided increasing evidence of individuals exhibiting loss aversion tendencies, with decision-making based on a pre-existing reference point. This creates an S-shaped value function and associated kink in the demand curve. This research provides contingent behaviour analysis of 1790 seafood consumers across the Mid-Atlantic region. A survey is specifically designed to elicit respondents' change in consumption from their reference point when faced with price variations in the seafood market. Results from a Tobit model with random effects provide empirical support of consumers behaving in a manner consistent with loss aversion theory, revealing a kinked demand curve for seafood meals at the respondents' reference point.
Notes
1These questions relate to other research not relevant to this discussion. For more information, please contact the author.
2The three additional equations provide a total of five equations to be estimated in the model.
3The coefficients on major-kill, minor-kill, brochure, brochure&insert, inspection and price for inspection are demand shifters relating to information effects not discussed herein. For an explanation of these coefficients, contact the author.