A reference-dependent approach to WTP for priority

Abstract

This article introduces the notions of reference dependence and loss aversion to the analysis of waiting times in tourism to examine their effects on people's willingness to pay (WTP). The empirical study carried out using quantile regression confirms that visitors to theme parks who are willing to pay a high price for express passes are reference-dependent (their WTP for an express pass is influenced by the difference between the expected waiting time and the perceived waiting time) and loss averse (a loss in waiting time, i.e. waiting longer than expected, has a greater effect on WTP as this loss is more annoying than an equal-sized gain in waiting time being satisfying). The implications of these findings for the literature on waiting in services are considered.