Prospect theory holds that human beings faced with a risky bet will tend to value potential losses about twice as much as potential gains. Previous research has demonstrated that prospect theory could be sufficient to explain an energy paradox in the market for automotive fuel economy. This...

U.S. national time series data on vehicle travel by passenger cars and light trucks covering the period 1966–2007 are used to test for the existence, size and stability of the rebound effect for motor vehicle fuel efficiency on vehicle travel. The data show a statistically significant effect...