Impact of information on risk attitudes: Implications on valuation of reliability and information

Wijayaratna, KP; Dixit, VV

Impact of information on risk attitudes: Implications on valuation of reliability and information

Wijayaratna, KP Dixit, VV

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Publisher:: ELSEVIER SCI LTD
Publication Type:: Journal Article
Citation:: Journal of Choice Modelling, 2016, 20, pp. 16-34
Issue Date:: 2016-09-01

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Field	Value	Language
dc.contributor.author	Wijayaratna, KP
dc.contributor.author	Dixit, VV
dc.date.accessioned	2022-08-08T10:01:13Z
dc.date.available	2022-08-08T10:01:13Z
dc.date.issued	2016-09-01
dc.identifier.citation	Journal of Choice Modelling, 2016, 20, pp. 16-34
dc.identifier.issn	1755-5345
dc.identifier.uri	http://hdl.handle.net/10453/159770
dc.description.abstract	Risk attitudes are an important behavioural characteristic that influences people's valuation of information and reliability. In a transport context, information has become widely accessible to road users through ITS systems, GPS technology and the internet justifying the importance of understanding the valuation of information by travellers. There have been a number of studies that have looked at the value of information and the value of reliability for a road user. However, to date there has not been a study that explicitly evaluates the impact of having information within a choice set on an individual's risk attitudes, which ultimately affects their valuation for information and reliability. This study conducts a controlled laboratory experiment, using methods of experimental economics, to measure the risk attitudes of users with and without the presence of information in the choice set. A model derived from Expected Utility Theory is used to infer the risk attitudes of the participants. The results of the analysis indicate that the presence of information in the choice set reduces risk aversion, which causes a reduction in people's valuation of information and reliability. It is critical to systematically incorporate these differences into behaviour models, since neglecting this fundamental difference could result in erroneous policy decisions, with respect to overpricing information, or inappropriately allocating funds for information systems.
dc.language	English
dc.publisher	ELSEVIER SCI LTD
dc.relation.ispartof	Journal of Choice Modelling
dc.relation.isbasedon	10.1016/j.jocm.2016.09.004
dc.rights	info:eu-repo/semantics/closedAccess
dc.title	Impact of information on risk attitudes: Implications on valuation of reliability and information
dc.type	Journal Article
utslib.citation.volume	20
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Engineering and Information Technology
pubs.organisational-group	/University of Technology Sydney/Faculty of Engineering and Information Technology/School of Civil and Environmental Engineering
utslib.copyright.status	closed_access	*
dc.date.updated	2022-08-08T10:01:11Z
pubs.publication-status	Published
pubs.volume	20

Abstract:

Risk attitudes are an important behavioural characteristic that influences people's valuation of information and reliability. In a transport context, information has become widely accessible to road users through ITS systems, GPS technology and the internet justifying the importance of understanding the valuation of information by travellers. There have been a number of studies that have looked at the value of information and the value of reliability for a road user. However, to date there has not been a study that explicitly evaluates the impact of having information within a choice set on an individual's risk attitudes, which ultimately affects their valuation for information and reliability. This study conducts a controlled laboratory experiment, using methods of experimental economics, to measure the risk attitudes of users with and without the presence of information in the choice set. A model derived from Expected Utility Theory is used to infer the risk attitudes of the participants. The results of the analysis indicate that the presence of information in the choice set reduces risk aversion, which causes a reduction in people's valuation of information and reliability. It is critical to systematically incorporate these differences into behaviour models, since neglecting this fundamental difference could result in erroneous policy decisions, with respect to overpricing information, or inappropriately allocating funds for information systems.

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http://hdl.handle.net/10453/159770