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Using prospect theory to investigate the low marginal value of travel time for small time changes

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  • Hjorth, Katrine
  • Fosgerau, Mogens

Abstract

A common finding in stated preference studies that measure the value of travel time (VTT) is that the measured VTT increases with the size of the time change considered, in conflict with standard neoclassical economic theory. We present a new test of a possible explanation for the phenomenon that builds on the diminishing or constant sensitivity of the value functions in prospect theory.

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Bibliographic Info

Article provided by Elsevier in its journal Transportation Research Part B: Methodological.

Volume (Year): 46 (2012)
Issue (Month): 8 ()
Pages: 917-932

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Handle: RePEc:eee:transb:v:46:y:2012:i:8:p:917-932

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Keywords: Value of travel time; Stated preference data; Prospect theory; Small time savings;

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References

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  1. Axhausen, Kay W. & Hess, Stephane & König, Arnd & Abay, Georg & Bates, John J. & Bierlaire, Michel, 2008. "Income and distance elasticities of values of travel time savings: New Swiss results," Transport Policy, Elsevier, vol. 15(3), pages 173-185, May.
  2. Kenneth Train, 2003. "Discrete Choice Methods with Simulation," Online economics textbooks, SUNY-Oswego, Department of Economics, number emetr2, Spring.
  3. Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
  4. Tversky, Amos & Kahneman, Daniel, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1039-61, November.
  5. Cantillo, Víctor & Heydecker, Benjamin & de Dios Ortúzar, Juan, 2006. "A discrete choice model incorporating thresholds for perception in attribute values," Transportation Research Part B: Methodological, Elsevier, vol. 40(9), pages 807-825, November.
  6. Fosgerau, Mogens, 2007. "Using nonparametrics to specify a model to measure the value of travel time," MPRA Paper 12009, University Library of Munich, Germany.
  7. Lars Hultkrantz & Reza Mortazavi, 2001. "Anomalies in the Value of Travel-Time Changes," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 35(2), pages 285-299, May.
  8. De Borger, Bruno & Fosgerau, Mogens, 2008. "The trade-off between money and travel time: A test of the theory of reference-dependent preferences," Journal of Urban Economics, Elsevier, vol. 64(1), pages 101-115, July.
  9. Henry Stott, 2006. "Cumulative prospect theory's functional menagerie," Journal of Risk and Uncertainty, Springer, vol. 32(2), pages 101-130, March.
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Citations

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Cited by:
  1. Maria Börjesson, 2014. "Inter-temporal variation in the travel time and travel cost parameters of transport models," Transportation, Springer, vol. 41(2), pages 377-396, March.
  2. Kemel, Emmanuel & Paraschiv, Corina, 2013. "Prospect Theory for joint time and money consequences in risk and ambiguity," Transportation Research Part B: Methodological, Elsevier, vol. 56(C), pages 81-95.
  3. Chen, Peng & Nie, Yu (Marco), 2013. "Bicriterion shortest path problem with a general nonadditive cost," Transportation Research Part B: Methodological, Elsevier, vol. 57(C), pages 419-435.

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