Regret theory-based route choices and traffic equilibria

Abstract

This article studies route choices and traffic equilibria when travel times are risky, and travellers are risk averse and regret averse. It is shown how regret theory, being one of the most popular contenders of expected utility theory throughout the social sciences, can be applied to model risky route choices by means of an expected modified utility function. Subsequently this function is used to study numerically how risk aversion and regret aversion jointly determine equilibrium outcomes in a simple binary route choice situation. It is found that increasing levels of regret aversion lead to equilibrium shifts towards routes whose mean travel time is low, routes that are less risky and especially routes whose worst-case travel time is low compared to that of the competing route. Furthermore, risk aversion and regret aversion are found to reinforce each other's impact on equilibrium towards a situation where safer routes are preferred over riskier (but faster) ones.