Abstract
Recently, regret-based choice models have been introduced in the travel behavior research community as an alternative to expected/random utility models. The fundamental proposition of regret theory is that individuals minimize the amount of regret they (are expected to) experience when choosing among choice alternatives. In this context, regret is defined as a function of attribute differences between the considered choice alternative and one or more foregone choice alternatives in an individual’s choice set. This definition of regret as a function of physical attributes of the choice alternatives implies that current regret-based choice models do not account for the perception of attributes, which is likely related to their magnitude. Therefore, in this paper, we propose and empirically test such an elaboration of the basic regret-minimization models. The current paper sets out to formulate random regret minimization models that incorporate a non-linear representation of the perception of attribute levels. Inspired by long-standing research on psycho-physical measurement, it is assumed that the perception of stimuli (attributes) is proportional to their magnitude. To allow for slight deviations from this representation, a more general non-linear psycho-physical representation of the relationship between attribute levels and their perception is also tested. The suggested models are tested using two data sets, one data set concerned the stated choice of shopping centre, the other concerned revealed preference of mode choice. The two newly formulated regret models are compared against each other and against their original random regret minimization base specifications. In addition to comparing the predictive performance of these model specifications, validation tests are conducted. In each case study, the newly suggested regret models, incorporating a non-linear representation of perception, achieve significant improvements in goodness-of-fit over the original regret formulations. The results of the K-fold validation tests provide further support to this finding.
Highlights
This definition of regret as a function of physical attributes of the choice alternatives implies that current regret-based choice models do not account for the perception of attributes, which is likely related to their magnitude
The current paper sets out to formulate random regret minimization models that incorporate a nonlinear representation of the perception of attribute levels
As in the first case study, the predictive performance of the models indicates that the models incorporating the psycho-physical relationship outperform the base models, but the degree of improvement is higher than in the first case study
Summary
In search of alternative behavioral foundations of choice models, the concept of regret has recently attracted the attention of several scholars in transportation research (Chorus et al 2008a, b; Chorus 2010; De Moraes Ramos et al 2011; Hess et al 2012; Chorus 2012a, 2012b; Kaplan and Prato 2012; Chorus and Bierlaire 2013; Chorus et al 2013b; Hensher et al 2013; Boeri and Masiero 2014; Chorus 2014a, b; Prato 2014; Rasouli and Timmermans 2015a). Chorus et al (2008a) introduced regret-based models into transportation research They provided an econometric framework extending seminal work (Bell 1982; Loomes and Sugden 1982, 1983, 1987; Quiggin 1994), from binary to multinomial and from single to multi-attribute choices. Applications cannot ony be found in transportation research area and in environmental studies (Thiene et al 2012) and health economics (de Bekker-Grob and Chorus 2013) All these regret-based models have in common that regret is a function of attributes differences of the choice alternatives. In order to investigate this issue, the current paper sets out to formulate elaborations of the basic random regret minimization models and incorporates a non-linear representation of the perception of attributes. The paper is completed with a discussion of the results and avenues of future research
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