models for referendum data the structure of discrete choice models for contingent valuation abstract in 1979 bishop and heberlein introduced an appealing variant of the contingent valuation method which required only yes or no responses hanemann developed a utility theoretic interpretation of the yes no responses which has helped popularize the approach recently cameron has offered another interpretation also utility theoretic which she argues is more general than the hanemann random utility model this paper compares the deterministic models suggested by hanemann and cameron showing them to be dual to each other it shows that correct specification of either function must exclude endogenous variables such as quantity demanded it also demonstrates that using utility theoretic models allows one to compare travel cost models and contigent valuation models on the basis of their implied behavior not on the unobservable surplus or variation measure

the demand for energy evidence from a cross country demand system abstract some new evidence on the income own price elasticities of demand for energy consumption by consumers is presented estimates are derived from a complete system of cross country demand equations with energy being one of the commodities considered

framing effects and impatience evidence from a large scale experiment we confront a representative sample of 1102 dutch individuals with a series of incentivized investment decisions and also elicit their time preferences there are two treatments that differ in the frequency at which individuals decide about the invested amount the low frequency treatment stimulates decision makers to frame a sequence of risky decisions broadly rather than narrowly we find that the framing effect is significantly larger for impatient than for patient individuals this result is robust to controlling for various economic and demographic variables and for cognitive ability

a comparison of contingent preference models i compare the informational efficiencies of contingent rating contingent ranking and two contingent paired comparison methods as alternatives to the referendum contingent valuation method the contingent rating method is hypothesized to be most efficient because ratings convey information on preference intensities and can uniquely represent respondent indifference or ambivalence survey data on hunters ratings of alternative hypothetical hunting trips are used to estimate four alternative indirect utility models from which marginal willingness to pay measures for individual trip attributes are derived model comparison wtp estimates and their confidence intervals confirm the relative efficiency of the contingent rating approach

causes consequences and cures of myopic loss aversion an experimental investigation we examine in an experiment the causes consequences and possible cures of myopic loss aversion mla for investment behaviour under risk we find that both investment horizons and feedback frequency contribute almost equally to the effects of mla longer investment horizons and less frequent feedback lead to higher investments however when given the choice subjects prefer on average shorter investment horizons and more frequent feedback exploiting the status quo bias by setting a long investment horizon or low feedback frequency as a default turns out to be a successful behavioural intervention that increases investment levels

personal traits and individual choices taking action in economic and non economic decisions abstract in a large number of decisions the option that does not require a specific action such as filling in a form is chosen frequently it is a stylized fact that opt in or opt out designs for otherwise identical choices lead to vastly different outcomes choice options are chosen more frequently simply because they are the no action alternative or default option however direct empirical evidence on the reasons for the popularity of defaults is scarce we devised a special survey module for the dutch dnb household survey to study potential explanations for default choices we find that the popularity of the default option is related to different personal traits in economic and non economic decisions financially literate individuals are more likely to take action and opt out the default option in economic decision making in non economic decisions procrastination increases the popularity of the default while individuals who care much about the opinion of others are more inclined to deviate from the default

do professional traders exhibit myopic loss aversion an experimental analysis two behavioral concepts loss aversion and mental accounting have been combined to provide a theoretical explanation of the equity premium puzzle recent experimental evidence supports the theory as students behavior has been found to be consistent with myopic loss aversion mla yet much like certain anomalies in the realm of riskless decision making these behavioral tendencies may be attenuated among professionals using traders recruited from the cbot we do indeed find behavioral differences between professionals and students but rather than discovering that the anomaly is muted we find that traders exhibit behavior consistent with mla to a greater extent than students

the changing demand for energy in rich and poor countries over 25 years abstract country specific income and own price elasticities of demand for private consumption of energy are compared across time and affluence for 43 countries that participated in the 1980 1996 and 2005 international comparison program based on estimates from a ten good demand system results indicate that income elasticities of demand for energy are significantly larger than unitary in 1980 are approximately unitary in 1996 but become inelastic for all 43 countries in 2005 own price elasticities decrease absolutely going from 1980 to 1996 to 2005 ranging from 0 8 to 1 0 in 1980 0 7 to 0 8 in 1996 and 0 6 to 0 7 in 2005 elasticity estimates are also calculated for the set of countries in 1996 and 2005 that do not participate in the icp in 1980

a simultaneous approach to the estimation of risk aversion and the subjective time discount rate in this paper we analyze a sample of 1832 individuals who responded to six randomly generated lottery questions that differ with respect to chance prize and the timing of the draw using a model that explicitly allows for consumption smoothing we obtain an estimate of relative risk aversion of 82 instead assuming consumption to be immediate gives an estimate of 2 close to what is traditionally reported while a model of full asset integration gives estimates higher by several orders of magnitude our results show that estimated risk aversion is sensitive to the assumptions made with respect to the consumption profile and that it is possible to determine the level of asset integration endogenously the average subjective time discount rate which includes a preference for the present equals 6 percent per month it is found that both parameters vary strongly over individuals and that the variation can be explained by income age gender and entrepreneurship consistent with the majority of previous evidence

evidence on preferences and subjective beliefs of risk takers the case of smokers abstract one reason that cigarette consumption is highly regulated is because of the paternalistic view that smokers would not make rational choices even if fully informed about the risks a deficiency of this view is that in the presence of preference heterogeneity regulating smoking may lead to smokers finding ways to circumvent the regulations though there is widespread recognition that preference heterogeneity may exist there is very little documentation of it in this study we provide empirical evidence on the relationship between smoking status and time and risk preference valuation of health and subjective beliefs about future macroeconomic events using panel data from the health and retirement study we find that smokers are more impatient than nonsmokers and are more pessimistic about future macroeconomic events which may reinforce their present orientation smokers are also more risk tolerant this suggests that smokers may more willingly bear risk and trade off current utility against future costs of smoking however they do not value being in excellent health differently from others our results also suggest that being more present oriented and risk tolerant is not caused by smoking but represents innate characteristics an implication of our results for product regulation is that restricting access to cigarettes is likely to be circumvented by smokers through other means in particular our results are consistent with the finding that smokers in states with higher taxes smoke longer cigarettes that are also higher in nicotine and tar content

the effect of myopia and loss aversion on risk taking an experimental test myopic loss aversion is the combination of a greater sensitivity to losses than to gains and a tendency to evaluate outcomes frequently two implications of myopic loss aversion are tested experimentally 1 investors who display myopic loss aversion will be more willing to accept risks if they evaluate their investments less often 2 if all payoffs are increased enough to eliminate losses investors will accept more risk in a task in which investors learn from experience both predictions are supported the investors who got the most frequent feedback and thus the most information took the least risk and earned the least money language en

why don t people insure late life consumption a framing explanation of the under annuitization puzzle rational models of risk averse consumers have difficulty explaining limited annuity demand we posit that consumers evaluate annuity products using a narrow investment frame that focuses on risk and return rather than a consumption frame that considers the consequences for lifelong consumption under an investment frame annuities are quite unattractive exhibiting high risk without high returns survey evidence supports this hypothesis whereas 72 percent of respondents prefer a life annuity over a savings account when the choice is framed in terms of consumption only 21 percent of respondents prefer it when the choice is framed in terms of investment features

beyond mobile number portability measuring consumer preferences for service portability in japan s mobile phone market japan s mobile phone market has been oligopolized by three incumbents who are seeking vertically integrated business models which may prevent competitors from using platform layers to provide original services we conduct two types of conjoint analysis to measure consumer stated preferences and draw two main conclusions from the analyses first the average consumer is willing to pay more than jpy 2000 us 20 to increase mobile service portability second the average consumer s willingness to pay corresponds to jpy 100 200 us 1 2 per song for securing music download platforms a dilemma exists in consumer preferences for service portability in japan s mobile phone market namely the choice between free mobile service portability and convenient music download platforms

how much are people willing to pay for silence a contingent valuation study despite its major importance in the urban environment the problem of noise has received little attention from environmental economists in this paper the economic value of a noise reduction programme is evaluated the chosen technique is contingent valuation using the recently proposed one and one half bound question format this new question format reduces the potential for response bias in multiple bound formats such as the double bound model while maintaining much of its efficiency through the estimations it is found that urban residents generally value noise negatively that is households are willing to pay for a noise reduction in particular it is found that households are willing to pay approximately four euros per decibel per year a further finding is that interviewees show scope sensitivity that is households display a different willingness to pay for different degrees of noise reduction most are willing to pay more for larger decreases in the level of disturbance from noise

heterogeneity in risky choice behaviour in a broad population we analyse risk preferences using an experiment with real incentives in a representative sample of 1 422 dutch respondents our econometric model incorporates four structural parameters that vary with observed and unobserved characteristics utility curvature loss aversion preferences towards the timing of uncertainty resolution and the propensity to choose randomly rather than on the basis of preferences we find that all four parameters contribute to explaining choice behaviour the structural parameters are significantly associated with socio economic variables but it is essential to incorporate unobserved heterogeneity in each of them to match the rich variety of choice patterns in the data

are risk aversion and impatience related to cognitive ability is the way that people make risky choices or tradeoffs over time related to cognitive ability this paper investigates whether there is a link between cognitive ability risk aversion and impatience using a representative sample of the population and incentive compatible measures we conduct choice experiments measuring risk aversion and impatience over an annual time horizon for a randomly drawn sample of roughly 1 000 german adults subjects also take part in two different tests of cognitive ability which correspond to sub modules of one of the most widely used iq tests interviews are conducted in subjects own homes we find that lower cognitive ability is associated with greater risk aversion and more pronounced impatience these relationships are significant and robust to controlling for personal characteristics educational attainment income and measures of credit constraints we perform a series of additional robustness checks which help rule out other possible confounds

individual preferences monetary gambles and stock market participation a case for narrow framing we argue that narrow framing whereby an agent who is offered a new gamble evaluates that gamble in isolation may be a more important feature of decision making than previously realized our starting point is the evidence that people are often averse to a small independent gamble even when the gamble is actuarially favorable we find that a surprisingly wide range of utility functions including many nonexpected utility specifications have trouble explaining this evidence but that this difficulty can be overcome by allowing for narrow framing our analysis makes predictions as to what kinds of preferences can most easily address the stock market participation puzzle

an experiment on risk taking and evaluation periods does the period over which individuals evaluate outcomes influence their investment in risky assets results from this study show that the more frequently returns are evaluated the more risk averse investors will be the results are in line with the behavioral hypothesis of myopic loss aversion which assumes that people are myopic in evaluating outcomes over time and are more sensitive to losses than to gains the results have relevance for the equity premium puzzle and also for the marketing strategies of fund managers

willingness and ability of bulgarian consumers to pay for improved public health care services an application of the contingent valuation method to the willingness and ability of bulgarian consumers to pay for public health care services is presented the study uses data from a household survey conducted in may june 2000 the willingness and ability to pay for outpatient inpatient and dental services is investigated a combination of interval checklist and open ended questions are used to elicit the willingness to pay amounts the impact of the sociodemographic characteristics on the responses is examined by a generalized tobit regression based on the regression equation the welfare effects of various fee levels are simulated

evaluation periods and asset prices myopic loss aversion at the financial marketplace abstract examining myopic loss aversion mla benartzi s thaler r 1995 myopic loss aversion and the equity premium puzzle quarterly journal of economics 110 73 92 in real financial markets has several merits in repeated situations investors may learn from each other aggregate market prices may eliminate individual violations of expected utility and individuals may decide differently in real situations than in laboratories we utilize a special feature at the tel aviv stock exchange tase occasional shifts of securities from daily to weekly trading if investors decisions are influenced by trading frequency manipulation then returns should be predictably affected mla results in a negative relation between risk aversion and the length of the evaluation period thus the longer the evaluation period is the lower the expected return is this intuition also suggests reduced sensitivity to economic events in longer evaluation periods we find strong support for mla in the marketplace when testing expected return as well as return sensitivity

a panel data analysis of the effect of corruption on tourism this study empirically tests the hypothesis that corruption has a negative effect on tourism having to pay bribes while on holiday or a business trip increases the costs of travelling to a country where corruption is prevalent tourists are thus more likely to travel to countries where these additional costs do not need to be incurred this hypothesis is tested using a panel data set of over 100 countries and 16 years the results indicate that a 1 point increase in the corruption perception index implying a decrease in corruption results in a 2 to 7 increase in tourist inflows in addition tourist inflows rise with gdp per capita openness and growth and are higher in countries with a temperate climate

the structure of tourist expenditure in fiji evidence from unit root structural break tests the central aim of this paper is to investigate whether shocks to fiji s tourism industry have a permanent effect or a transitory effect on tourist expenditure in fiji to accomplish this aim the zivot and andrews 1992 one break test and the lumsdaine and papell 1997 two break tests are used the one break and two break tests reveal 1987 the year of the military coups in fiji as the year of the break moreover it is possible to reject the unit root null leading to the conclusion that shocks to fiji s tourism industry have a transitory effect on tourist expenditure in fiji

the public value of improving a weather forecasting system in korea a choice experiment study abstractthe korean government plans to improve the quality of its weather forecasting system in order to increase its public utility the benefits arising from the implementation of this plan shoul

are teams prone to myopic loss aversion an experimental study on individual versus team investment behavior abstract myopic loss aversion mla has been found to have a persistent influence on individual decision making under risk in this paper i show that team decision making attenuates mla but that teams are also prone to mla

does commitment or feedback influence myopic loss aversion an experimental analysis empirical research has shown that a lower feedback frequency combined with a longer bind ing period decreases myopia and thereby increases the willingness to invest into a risky asset in an experimental study we disentangle the intertwined manipulation of feedback frequency and binding period to analyze how both variables alone contribute to the change in myopia and how they interact we find a strong effect for the length of commitment a much less pro nounced effect for the feedback frequency and a strong interaction between both variables the results have important implications for real world intertemporal decision making

choice modelling approaches a superior alternative for environmental valuation in this paper we examine some popular choice modelling approaches to environmental valuation which can be considered as alternatives to more familiar valuation techniques based on stated preferences such as the contingent valuation method a number of choice modelling methods are consistent with consumer theory and its focus on an attribute based theory of value permits a superior representation of many environmental management contexts however choice modelling surveys can place a severe cognitive burden upon respondents and induce satisficing rather than maximising behavioural patterns in this framework we seek to identify the best available choice modelling alternative and investigate its potential to solve some of the major biases associated with standard contingent valuation we then discuss its use in the light of policy appraisal needs within the eu an application to the demand for rock climbing in scotland is provided as an illustration

does aggregated returns disclosure increase portfolio risk taking many experiments have found that participants take more investment risk if they see returns less frequently see portfolio level returns rather than each individual asset s returns or see long horizon rather than one year historical return distributions in contrast we find that such information aggregation treatments do not affect total equity investment when we make the investment environment more realistic than in prior experiments previously documented aggregation effects are not robust to changes in the risky asset s return distribution or the introduction of a multi day delay between portfolio choice and return realizations

performing arts attendance an economic approach this paper examines to what extent art education prices and standard socio economic characteristics influence attendance at professional performing arts events theatre classical music opera ballet and dance it distinguishes the influence such variables have on whether a person participates or not from the effect that they have on the number of times a person decides to attend the introduction of art education and price variables is likely to reduce the omitted variable bias present in previous empirical studies and improve estimations art education is highly correlated with participation while it is not equally associated with frequency of attendance prices and geographical concentration are generally not correlated with participation however there are large differences among art forms and economic resources appear to be relevant in the case of classical music policy makers can use information on what results can be expected from policies aimed at reducing prices or increase art education in

using conjoint analysis to derive estimates of compensating variation abstract we use several approaches to derive estimates of hicksian compensating variation from conjoint ratings data the different estimation approaches produced mixed results with respect to consistency with utility theory statistical significance of key variables magnitude of welfare estimates and confidence bounds on welfare estimates these findings suggest conjoint analyses are not a panacea for the problems being debated regarding contingent valuation and travel cost methodologies and conjoint questions appear to share many of the advantages and disadvantages associated with dichotomous choice contingent valuation questions

narrow bracketing and dominated choices an experiment by tversky and kahneman 1981 illustrates that people s tendency to evaluate risky decisions separately can lead them to choose combinations of choices that are first order stochastically dominated by other available combinations we investigate the generality of this effect both theoretically and experimentally we show that for any decisionmaker who does not have constant absolute risk averse preferences and who evaluates her decisions one by one there exists a simple pair of independent binary decisions where the decisionmaker will make a dominated combination of choices we also characterize as a function of a person s preferences the amount of money that she can lose due to a single mistake of this kind the theory is accompanied by both a real stakes laboratory experiment and a large sample survey from the general u s population replicating tversky and kahneman s original experiment where decisionmakers with prototypical prospect theory preferences will choose a dominated combination we find that 28 of the participants do so in the survey we ask the respondents about several hypothetical large stakes choices and find higher proportions of dominated choice combinations a statistical model that estimates preferences from the survey results is best fit by assuming people have utility functions that are close to prospect theory value functions and that about 83 of people bracket narrowly none of these results varies strongly with the personal characteristics of participants we also demonstrate directly that dominated choices are driven by narrow bracketing when we eliminate the possibility of narrow bracketing by using a combined presentation of the decisions the dominated choices are eliminated in the laboratory experiment and are greatly reduced in the survey

is cultural heritage really important for tourists a contingent rating study in this article we present the results of a contingent rating study carried out on a sample of tourisits visiting scicli a sicilian town known for its baroque heritage in particular we focus on different attributes of tourism products namely season accommodation and cultural heritage to study how much each of these attributes weights in tourists preferences we also study how the socio demographic characteristics of people affect their evaluation of the different attributes of tourism products the heritage endowment appears to be far from being the most important factor this result is consistent across different socio demographic subgroups of interviewed persons

coping with complexity experimental evidence for narrow bracketing in multi stage contests abstract this paper investigates whether decision makers bracket their choices narrowly to facilitate complex decision problems evidence from a framing variation of rewards in experimental two stage pairwise elimination contests indicates that decision makers neglect the option value of participation in future stages of the contest if the reward frame facilitates the separate consideration of stages but not if the reward frame induces forward looking behavior decision makers account for the option value of participation in future stages of the contest independently of the reward frame however when complex strategic interactions in future stages of the contest are replaced by simple lotteries that facilitate the determination of the option value the results present novel evidence for the prevalence and the determinants of choice bracketing as a means to cope with complexity

tying odysseus to the mast evidence from a commitment savings product in the philippines we designed a commitment savings product for a philippine bank and implemented it using a randomized control methodology the savings product was intended for individuals who want to commit now to restrict access to their savings and who were sophisticated enough to engage in such a mechanism we conducted a baseline survey on 1777 existing or former clients of a bank one month later we offered the commitment product to a randomly chosen subset of 710 clients 202 28 4 percent accepted the offer and opened the account in the baseline survey we asked hypothetical time discounting questions women who exhibited a lower discount rate for future relative to current trade offs and hence potentially have a preference for commitment were indeed significantly more likely to open the commitment savings account after twelve months average savings balances increased by 81 percentage points for those clients assigned to the treatment group relative to those assigned to the control group we conclude that the savings response represents a lasting change in savings and not merely a short term response to a new product

estimating individual discount rates in denmark a field experiment we estimate individual discount rates with respect to time streams of money using controlled laboratory experiments these discount rates are elicited by means of field experiments involving real monetary rewards the experiments were carried out across denmark using a representative sample of 268 people between 19 and 75 years of age individual discount rates are estimated for various households differentiated by socio demographic characteristics such as income and age our conclusions are that discount rates are constant over the 12 month to 3 year horizons used in these experiments and that discount rates vary substantially with respect to several socio demographic variables hence we conclude that it would be reasonable to assume constant discount rates for specific household types but not the same rates across all households

myopic loss aversion information feedback vs investment flexibility we experimentally disentangle the effect of information feedback from the effect of investment flexibility on the investment behavior of a myopically loss averse investor our findings show that varying the information condition alone suffices to induce behavior that is in line with the hypothesis of myopic loss aversion

evaluation periods and asset prices in a market experiment we test whether the frequency of feedback information about the performance of an investment portfolio and the flexibility with which the investor can change it influence her risk attitude in markets in line with the prediction of myopic loss aversion benartzi and thaler 1995 we find that more information and more flexibility result in less risk taking market prices of risky assets are significantly higher if feedback frequency and decision flexibility are reduced this result supports the findings from individual decision making and shows that markets do not eliminate such behavior