Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/35114
Authors: 
Neumann, Einat
Neuman, Shoshana
Year of Publication: 
2007
Series/Report no.: 
IZA Discussion Papers 3238
Abstract: 
A Discrete Choice Experiment (DCE) in the health-care sector is used to test the loss aversion theory that is derived from reference-dependent preferences: The absolute subjective value of a deviation from a reference point is generally greater when the deviation represents a loss than when the same-sized change is perceived as a gain. As far as is known, this paper is the first to use a DCE to test the loss aversion theory. A DCE appears to be a highly suitable tool for this testing because it estimates the marginal valuations of attributes, based on deviations from a reference point (a constant scenario). Moreover, loss aversion can be examined for each attribute separately. A DCE can also be applied to non-traded goods with non-tangible attributes. A health-care event is used for empirical illustration: The loss aversion theory is tested within the context of preference structures for maternity-ward attributes, estimated using data entailing 3850 observations from a sample of 542 women who recently gave birth. Seven hypotheses are presented and tested. Overall, significant support for behavioral loss aversion theories was found.
Subjects: 
Preferences
attributes
loss aversion
reference-dependence
discrete choice experiment
maternity-wards
JEL: 
D01
Document Type: 
Working Paper

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