Indifference based value of time measures for Random Regret Minimisation models

Abstract

The notion of Value of Time (VoT) is a cornerstone of discrete choice based economic appraisal in transportation. Its derivation and interpretation in the context of Random Utility Maximisation (RUM) models with linear-additive utility functions is straightforward and well known. The choice set-composition effects and semi-compensatory behaviour emphasised in the Random Regret Minimisation (RRM) model induces deviations from this basic VoT specification. This paper reviews and provides new insights into the RRM based VoT measure developed by Chorus (2012a). It defines the theoretical properties of the measure using the micro-economic notion of indifference, and provides insights into the limitations of the measure with respect to deriving individual and aggregate welfare measures. Additionally, the representative consumer approach is adopted to derive an alternative VoT measure, which is behaviourally more complete than the Chorus (2012a) measure. Although alleviating some of the restrictions, the measure has its own theoretical disadvantage. The main contribution of the paper can therefore be summarised as the generation of the necessary insights into the extent to which RRM-based VoT measures can be applied for the purpose of economic appraisal.