A comparison of Regret-Minimization and Utility-Maximization in the context of travel mode choices
| publication year: | 2008 |
| full reference: | Chorus, C.G., Arentze, T.A., Timmermans, H.J.P., 2008. A comparison of regret-minimization and utility-maximization in the context of travel mode-choices. Paper presented at the 87th annual meeting of the Transportation Research Board, Washington, D.C. |
| This paper provides an empirical comparison between regret-minimization and utility-maximization perspectives on travel choice behavior. The key difference between these two perspectives is that regret-minimization implies that the anticipated satisfaction associated with a chosen alternative depends on the anticipated performance of non-chosen alternatives as well. In order to provide a meaningful statistical comparison, we formulate a model of regret-minimization such that it reduces to utility-maximization for a given parameter restriction. Estimation results, based on a binary stated mode experiment, clearly show how the regret-based model outperforms its utilitarian counterpart. Furthermore it is shown how participants of the experiment attached relatively much weight to the situation where the non-chosen alternative is slightly better than the chosen one, and they tend to discount larger differences. We show how this concavity of the regret-function is in line with the Prospect Theoretical notion of risk seeking behavior in the domain of losses. | |
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