Linking loss aversion and present bias with overspending behaviour of tourists: insights from a lab-in-the-field experiment

Nguyen, Quang (2016) Linking loss aversion and present bias with overspending behaviour of tourists: insights from a lab-in-the-field experiment. Tourism Management, 54 . pp. 152-159. ISSN 0261-5177

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Abstract

Building upon Prospect Theory and Hyperbolic Time Discounting models, we explore how behavioral factors influence the probability of overspending among outbound leisure travelers. We construct our data in two steps. First, we collect demographics and travel-related variables from a random sample of 314 Singaporean tourists across different age groups and income levels. Second, we conduct a field experiment to measure their risk and time preferences, specifically loss aversion and present bias. We then explore the link between the measured preferences to overspending behaviour. The findings reveal an interesting link between loss aversion, present bias and traveling expenditure patterns: outbound tourists with high loss aversion and high present bias are more likely to overspend. Finally, our study also highlights the role of group identity in de-biasing. Specifically, individuals are more likely to behave according to standard economic models when making decisions in groups.

Item Type: Article
Additional Information: Available online 22 November 2015
Research Areas: A. > Business School
A. > Business School > Economics
A. > Business School > International Management and Innovation > Corporate Social Responsibility and Business Ethics group
A. > Business School > Strategic Marketing, Consumer Behaviour and Branding/Identity group
Item ID: 17716
Notes on copyright: The final published version is available as an open access article under the CC BY-NC-ND license via Elsevier ScienceDirect at http://dx.doi.org/10.1016/j.tourman.2015.09.019
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Depositing User: Quang Nguyen
Date Deposited: 29 Sep 2015 16:07
Last Modified: 18 Sep 2017 13:15
URI: http://eprints.mdx.ac.uk/id/eprint/17716

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