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Embedding Risk Attitudes in a Scheduling Model: Application to the Study of Commuting Departure Time

Author

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  • Zheng Li

    (Institute of Transport and Logistics Studies (ITLS), Business School, University of Sydney, New South Wales 2006, Australia)

  • Alejandro Tirachini

    (Institute of Transport and Logistics Studies (ITLS), Business School, University of Sydney, New South Wales 2006, Australia)

  • David A. Hensher

    (Institute of Transport and Logistics Studies (ITLS), Business School, University of Sydney, New South Wales 2006, Australia)

Abstract

In traditional travel time reliability valuation studies, the value of travel time savings and the value of travel time reliability (or reduced time variability) are estimated within a linear utility functional form, which assumes risk-neutral attitudes for decision makers. In this paper, we develop nonlinear scheduling models to address both risk attitude and preference in the context of a stated choice experiment of car commuters facing risky choices where the risk is associated with the trip time. We also investigate unobserved between-individual heterogeneity in time-related parameters and risk attitudes using a mixed multinomial logit model. The willingness-to-pay values for reducing the mean travel time and variability (earlier/later than the preferred arrival time) are also estimated within the nonlinear scheduling framework. The model is then used to estimate preferred departure times for commuters, assuming that random link capacities are the source of travel time variability. Results show that the more variable travel times are, the earlier commuters depart and that the nonlinear scheduling model predicts earlier optimal departure times than the linear scheduling model does. The application in this paper helps to bridge the gap between theory and practice.

Suggested Citation

  • Zheng Li & Alejandro Tirachini & David A. Hensher, 2012. "Embedding Risk Attitudes in a Scheduling Model: Application to the Study of Commuting Departure Time," Transportation Science, INFORMS, vol. 46(2), pages 170-188, May.
  • Handle: RePEc:inm:ortrsc:v:46:y:2012:i:2:p:170-188
    DOI: 10.1287/trsc.1110.0389
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    7. Canales, Elizabeth & Bergtold, Jason S. & Williams, Jeffery & Peterson, Jeffrey, 2015. "Estimating farmers’ risk attitudes and risk premiums for the adoption of conservation practices under different contractual arrangements: A stated choice experiment," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205640, Agricultural and Applied Economics Association.
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