Violations of Expected Utility Theory in Route-Choice Stated Preferences: Certainty Effect and Inflation of Small Probabilities

By Erel Avineri, Joseph Prashker. 2004

155 citations recorded by the source corpus.

Common travel-choice models are based on the maximum utility assumption. However, the use of expected utility theory in descriptive models of individual choice has been criticized by behavioral scientists and recently also by transportation researchers. The aim of this work is to examine whether violations of expected utility theory may be found in travelers' stated-preference behavior. In this work, a route-choice stated-preference experiment was conducted. A questionnaire, inspired by experiments of Kahneman and Tversky, presented simple route-choice problems. Evidence was found of two violations of expected utility theory. The first is known as the Allais paradox (certainty effect), which is demonstrated by a situation in which the extreme underweighting of high probabilities, which fall short of certainties, makes certain (low) travel time outcomes very attractive. Evidence of another violation of expected utility theory, inflation of small probabilities, is shown on the basis of a set of stated-preference route-choice problems. The experimental results may be explained by prospect theory, an alternative model of decision making under risk.

Subfields: Economics and Econometrics, General Decision Sciences, Transportation

View Paper: https://www.semanticscholar.org/paper/7d16bda978713e492b4b360bacf452727a483ac8

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. Eran Ben-Elia
2. Xuan Di
3. Erel Avineri
4. Henry X. Liu

In General Decision Sciences

1. Eran Ben-Elia
2. Xuan Di
3. Erel Avineri
4. Henry X. Liu

In Transportation

1. Xuan Di
2. Henry X. Liu
3. Xuegang Ban
4. Eran Ben-Elia
5. Erel Avineri

Citations in the corpus

• Response to Travel Information: A Behavioural Review (2015, background): “Avineri and Prashker (2004) and Avineri and Bovy (2008) found empirical evidence for framing effects and loss aversion when risky prospects are described in travel time terms with explicit known probabilities.”
• Second best toll pricing within the framework of bounded rationality (2016, background): “, 2001), stated preference surveys (Avineri and Prashker, 2004), and GPS vehicle trajectory data (Morikawa et al., 2005; Zhu, 2011) showed that in reality, this assumption is too restrictive and drivers do not always choose the shortest paths. Thus, many other behavioral models have been developed t”