Abstract
Over the last 15 years we have seen a small but growing interest in Prospect Theory (PT) as an alternative behavioural paradigm within which to represent traveller behaviour. Some elements of PT such as gains and losses have become so popular in travel choice studies that authors increasingly indicate that they are applying PT. In its strictest interpretation, PT has a number of essential elements that must be included if the link with PT can be claimed. This paper reviews recent transportation studies which report an association with PT as a way of gaining a greater appreciation of what is and what is not an application of PT. We set the scene by providing an overview of PT using studies in the fields of psychology and behavioural economics, where PT was originally established and further developed, and then identify travel behaviour studies which satisfy the PT (Original or Cumulative PT) conditions. A number of specific issues are identified to highlight the connection to PT, including empirically estimated prospect theoretic parameters and referencing. Some behavioural limitations of the reviewed transport PT studies are also presented, including the absence of willingness to pay estimates and consideration of unobserved between‐individual heterogeneity.
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