Utility Maximisation and Regret Minimisation: A Mixture of a Generalisation
Bounded Rational Choice Behaviour: Applications in Transport
ISBN: 978-1-78441-072-8, eISBN: 978-1-78441-071-1
Publication date: 31 January 2015
Abstract
Purpose
This chapter proposes a new mixture model which allows for heterogeneity in sensitivities and decision rules across decision makers and attributes.
Theory
A new mixture model is put forward in which the different latent classes make use of different decision rules, where the use of generalised random regret minimisation kernel allows for within class heterogeneity in the decision rules applied across attributes.
Findings
Our theoretical developments are supported by the findings of an empirical application using data from a typical stated choice survey.
Originality and value
Existing work has looked at heterogeneity in decision rules and sensitivities across respondents. Other work has focused on the possibility that different decision rules apply to different attributes. This chapter puts forward a model that combines these two directions of research and does so in a way that lets the optimal specification be driven by the data rather than being imposed by the analyst.
Keywords
Citation
Hess, S. and Chorus, C.G. (2015), "Utility Maximisation and Regret Minimisation: A Mixture of a Generalisation", Rasouli, S. and Timmermans, H. (Ed.) Bounded Rational Choice Behaviour: Applications in Transport, Emerald Group Publishing Limited, Leeds, pp. 31-47. https://doi.org/10.1108/978-1-78441-072-820151006
Publisher
:Emerald Group Publishing Limited
Copyright © 2015 Emerald Group Publishing Limited