Testing prospect theory in airline demand
The article tests for the existence of reference dependence, loss aversion and diminishing sensitivity in airline demand, in the context of price responsiveness amongst low cost, regular and charter airlines. The study incorporates the reference-dependent model into a mixed model to control for heterogeneity. The application finds considerable differences between reference and actual prices in decision-making, confirming that reference dependence exists. People react more strongly to price increases than to decreases relative to their reference price supporting the loss aversion phenomenon and that there is diminishing sensitivity for losses only.
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Availability:
- Find a library where document is available. Order URL: http://worldcat.org/oclc/31005945
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Supplemental Notes:
- Abstract reprinted with permission from Elsevier.
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Authors:
- Nicolau, Juan Luis
- Publication Date: 2011-7
Language
- English
Media Info
- Media Type: Print
- Features: Bibliography; References; Tables;
- Pagination: pp 241-243
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Serial:
- Journal of Air Transport Management
- Volume: 17
- Issue Number: 4
- Publisher: Elsevier
- ISSN: 0969-6997
- Serial URL: http://www.sciencedirect.com/science/journal/09696997
Subject/Index Terms
- TRT Terms: Air charter service; Airlines; Full service carriers; Low cost carriers; Prices; Sensitivity analysis; Travel demand
- Uncontrolled Terms: Decision management tools; Dependence; Loss aversion; Price sensitivity; Prospect theory; Reference models
- Subject Areas: Aviation; Finance; Planning and Forecasting;
Filing Info
- Accession Number: 01340554
- Record Type: Publication
- Files: TRIS
- Created Date: May 19 2011 9:00AM