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The trade-off between money and time: A test of the theory of reference-dependent preferences

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Academic Press
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Keywords
  • We Formulate A Model Of Reference-Dependent Preferences Based On The Marginal Rate Of Substitution A
  • 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 (Wil
  • Willingness To Accept (Wta)
  • Equivalent Gain (Eg) And Equivalent Loss (El))
  • Moreover
  • We Show That The Model Allows Recovering The Underlying ‘Reference-Free’ 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 C
  • 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 Sometime
  • 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

Abstract

The trade-off between money and time: A test of the theory of reference-dependent preferences - DTU Orbit (16/02/14) The trade-off between money and time: A test of the theory of reference-dependent preferences - DTU Orbit (16/02/14) De Borger B, Fosgerau M. The trade-off between money and time: A test of the theory of reference-dependent preferences. Journal of Urban Economics. 2008;64(1):101-115. Available from: http://dx.doi.org/10.1016/j.jue.2007.09.001

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