Exploring reference-dependency in route switching behavior on intercity travel: Endowment effect and disparities between willingness to pay and willingness to accept

Abstract

This study explores asymmetric preferences in route switching behavior on intercity travel. A reference-dependent travel choice model reflecting the endowment effect is empirically compared with the classical symmetric travel choice model to investigate the significance of the reference-dependency. Based on the application to stated preference data, our results reveal that the reference-dependent travel choice model outperforms the classical symmetric travel choice model in route switching decision, indicating the significant disparities between WTA and WTP. It implies that policy making based on the results of the classical symmetric model assuming equivalent WTA and WTP could lead to the overestimation of switching demand. Furthermore, our results show that drivers are more heterogeneous in terms of WTA than WTP. Moreover, our applications of the latent class mixed logit structure indicate that most of the responded drivers show reference-dependency in route switching decision. Our findings in this study are essential in transport network policy making.