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This chapter reviews models of decision-making and choice under conditions of certainty. It allows readers to position the contribution of the other chapters in this book in the historical development of the topic area.

Bounded rationality is defined in terms of a strategy to simplify the decision-making process. Based on this definition, different models are reviewed. These models have assumed that individuals simplify the decision-making process by considering a subset of attributes, and/or a subset of choice alternatives and/or by disregarding small differences between attribute differences.

A body of empirical evidence has accumulated showing that under some circumstances the principle of bounded rationality better explains observed choices than the principle of utility maximization. Differences in predictive performance with utility-maximizing models are however small.

The chapter provides a detailed account of the different models, based on the principle of bounded rationality, that have been suggested over the years in travel behaviour analysis. The potential relevance of these models is articulated, model specifications are discussed and a selection of empirical evidence is presented. Aspects of an agenda of future research are identified.

The chapter outlines the principles underlying relative utility models, discusses the results of empirical applications and critically assesses the usefulness of this specification against commonly used random utility models and other context dependence models. It also discusses how relative utility can be viewed as a generalisation of context dependency.

In contrast to the conventional concept of random utility, relative utility assumes that decision-makers derive utility from their choices relative to some threshold(s) or reference points. Relative utility models thus systematically specify the utility against such thresholds or reference points.

Examples in the chapter show that relative utility model perform well in comparison to conventional utility-maximising models in some circumstances.

Examples of relative utility models are rare in transportation research. The chapter shows that several recent models can be viewed as special cases of relative utility models.

The cognitive composition process of attribute information plays a critical role in heuristic aspects of consumers’ multiattribute preferential decisions. This study examines the effects of attribute information order and attribute information amount on consumers’ multiattribute preferential decisions under the premise of consumers’ limited information processing capacity. An experiment with two separate designs is conducted for testing the different hypotheses. The results support the hypothesis that consumers’ multiattribute preferential decisions are influenced by the amount of attribute information received/processed. The attribute information order is found to affect not only the outcomes of consumer decisions but also the amount of attribute information processed. These findings further suggest that consumers may be more inclined to adopt strategies of a noncompensatory heuristic nature when making multiattribute preferential decisions.

This chapter focuses on individuals’ mental representations of complex decision problems in transportation. An overview of approaches and techniques in this recent area of research is given as well as an illustration. The illustration concerns an application of CNET (causal network elicitation technique) to measure mental representations in a shopping activity scheduling task. The presence of an online shopping alternative is varied to investigate the influence of an online alternative on how individuals represent the choice problem.

Mental-model and means-ends-chain theories are discussed. These theories state that individuals when faced with a decision problem construct a mental representation of the choice alternatives by activating relevant parts of their broader causal knowledge that allow them to evaluate consequences regarding their existing needs. Furthermore, these theories emphasise that situational and person dependence of this process can explain observed variability in preferences of travellers.

The results indicate that considerable variation exists between individuals in terms of both the complexity, and the attributes and benefits that are activated in the mental representation of the choice problem. Presence of an online alternative has an influence on the benefits that individuals consider important. The impact is however small.

The chapter provides an overview of recent developments in the study of mental representations underlying choice behaviour. Traditionally, this has been the exclusive domain of qualitative research methods. The techniques reviewed enable larger samples and a formal representation of mental representations. Thus, the approach can help to better understand preference heterogeneity and incorporate this in (transport) choice models.

The pattern of racial segregation in U.S. elementary and secondary schools has changed significantly over the last 25 years. This chapter examines the relationship between the racial composition of schools and the choices white parents make concerning the schools their children attend. Restricted access files at the Bureau of the Census allow us to identify each household's Census block of residence and, in turn, suburban public school districts and urban public school attendance areas. We find that the racial composition of schools and neighborhoods are very important in the school and location decisions of white families.

Independent travelers are those vacationers who have booked only a minimum of their transportation and accommodation arrangements prior to departure on the vacation. Independent travel is an important and growing sector of worldwide tourism. Choice of vacation itinerary for the independent vacation represents a complex series of decisions regarding purchase of multiple leisure and tourism services. This chapter builds and tests a model of independent traveler decision-making for choice of vacation itinerary. The research undertaken employs a two-phase, inductive–deductive case study design. In the deductive phase, the researcher interviewed 20 travel parties vacationing in New Zealand for the first time. The researcher interviewed respondents at both the beginning and the end of their New Zealand vacations. The study compares pre-vacation research and plans, and actual vacation behaviors, on a case-by-case basis. The study examines case study narratives and quantitative measures of crucial variables. The study tests two competing models of independent traveler decision-making, using a pattern-matching procedure. This embedded research design results in high multi-source, multi-method validity for the supported model. The model of the Independent Vacation as Evolving Itinerary suggests that much of the vacation itinerary experienced in independent travel is indeed unplanned, and that a desire to experience the unplanned is a key hedonic motive for independent travel. Rather than following a fixed itinerary, the itinerary of an independent vacation evolves as the vacation proceeds. The independent traveler takes advantage of serendipitous opportunities to experience a number of locations, attractions and activities that they had neither actively researched nor planned.

Homophily, or the tendency for individuals to be attracted to those who resemble them, is significantly influential in the formation of startup founding and top management teams. But its role in subsequent stages of startup growth remains largely unclear. We consider the impact of homophily on matching of early workers to startups. We propose that, in the case of underrepresented minority groups, the tendency toward homophily plays an important role in this matching process, albeit in an asymmetric way. In particular, homophily exerts a stronger influence on the supply than the demand side: job candidates are more inclined to favor startups with demographically similar founders than startup founders are inclined to favor demographically similar job-seekers. Focusing on an important group of historically disadvantaged workers – women – we examine these arguments using unique data on the online recruiting of high-tech startups concentrated in the Silicon Valley. We find evidence suggesting that female candidates' propensity to apply to a job at a given startup increases with the proportion of female founders. However, startups with a higher proportion of female founders are not more likely than other startups to favor female candidates in personnel selection.

This work addresses how consumer perceptions of quality may be influenced by the composition of competition. I develop a theoretical framework that explains how consumer evaluations of quality can be negatively impacted by a product's stylistic similarity to popular competitors. These issues are examined empirically using more than 75,000 online consumer evaluations, from the evaluation aggregator Rotten Tomatoes, of 123 feature films released in the United States during 2007. Results suggest that during a movie's opening week, movies that are stylistically similar to the top-performing box office movie are evaluated less favorably. Additional analyses indicate that this negative effect may persist in later periods due to social conformity pressures, and that there is reduced demand for those movies that are stylistically similar to the top box office performer. This article contributes to the broader literature in strategic management by depicting how stylistic features of competitors can affect consumer behaviour and perceptions of quality in markets. This work also suggests managerial implications for entry-timing decisions and positioning choices.