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Risk, uncertainty and discrete choice models

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Author Info

  • Andre Palma

    ()

  • Moshe Ben-Akiva
  • David Brownstone
  • Charles Holt
  • Thierry Magnac
  • Daniel McFadden
  • Peter Moffatt
  • Nathalie Picard
  • Kenneth Train
  • Peter Wakker
  • Joan Walker

Abstract

This paper examines the cross-fertilizations of random utility models with the study of decision making under risk and uncertainty. We start with a description of the Expected Utility (EU) theory and then consider deviations from the standard EU frameworks, involving the Allais paradox and the Ellsberg paradox, inter alia. We then discuss how the resulting Non-EU framework can be modeled and estimated within the framework of discrete choices in static and dynamic contexts. Our objectives in addressing risk and ambiguity in individual choice contexts are to understand the decision choice process, and to use behavioral information for prediction, prescription and policy analysis.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s11002-008-9047-0
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Bibliographic Info

Article provided by Springer in its journal Marketing Letters.

Volume (Year): 19 (2008)
Issue (Month): 3 (December)
Pages: 269-285

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Handle: RePEc:kap:mktlet:v:19:y:2008:i:3:p:269-285

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Web page: http://www.springerlink.com/link.asp?id=100312

Related research

Keywords: Discrete choice; Decision making; Risk; Uncertainty; (Cumulative) prospect theory; Ambiguity;

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References

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  1. Lam, Terence C. & Small, Kenneth A., 2003. "The Value of Time and Reliability: Measurement from a Value Pricing Experiment," University of California Transportation Center, Working Papers qt47s4z7z5, University of California Transportation Center.
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Citations

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Cited by:
  1. 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.
  2. Ignacio Inoa & Nathalie Picard & André De Palma, 2014. "Effect of an Accessibility Measure in a Model for Choice of Residential Location, Workplace, and Type of Employment," Working Papers hal-00964212, HAL.
  3. Klaus Glenk & Sergio Colombo, 2013. "Modelling outcome-related risk in choice experiments," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(4), pages 559-578, October.
  4. André De Palma & Nathalie Picard & Jean-Luc Prigent, 2010. "Eliciting Utility for (Non)Expected Utility Preferences Using Invariance Transformations," Working Papers hal-00517726, HAL.
  5. Ignacio A. Inoa & Nathalie Picard & André De Palma, 2013. "Commuting Time and Accessibility in a Joint Residential Location, Workplace, and Job Type Choice Model," Working Papers hal-00776945, HAL.
  6. André De Palma & Nathalie Picard & Jean-Luc Prigent, 2009. "Prise en compte de l'attitude face au risque dans le cadre de la directive MiFID," Working Papers hal-00418892, HAL.
  7. Xiao, Yu & Fukuda, Daisuke, 2013. "On the cost of misperceived travel time variability," MPRA Paper 49737, University Library of Munich, Germany.
  8. de Moraes Ramos, Giselle & Daamen, Winnie & Hoogendoorn, Serge, 2013. "Modelling travellers' heterogeneous route choice behaviour as prospect maximizers," Journal of choice modelling, Elsevier, vol. 6(C), pages 17-33.
  9. Börjesson, Maria & Eliasson, Jonas, 2011. "On the use of "average delay" as a measure of train reliability," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(3), pages 171-184, March.
  10. Herriges, Joseph A. & Bhattacharjee, Subhra & Kling, Catherine L., 2011. "Capturing Preferences Under Incomplete Scenarios Using Elicited Choice Probabilities," Staff General Research Papers 32626, Iowa State University, Department of Economics.
  11. Nguyen, Quang, 2009. "Do fishermen have different preferences?: Insights from an experimental study and household data," MPRA Paper 16012, University Library of Munich, Germany.
  12. Greene, David L., 2011. "Uncertainty, loss aversion, and markets for energy efficiency," Energy Economics, Elsevier, vol. 33(4), pages 608-616, July.
  13. Liya Guo & Shan Huang & Jun Zhuang & Adel Sadek, 2013. "Modeling Parking Behavior Under Uncertainty: A Static Game Theoretic versus a Sequential Neo-additive Capacity Modeling Approach," Networks and Spatial Economics, Springer, vol. 13(3), pages 327-350, September.
  14. Quang Nguyen, 2011. "Does nurture matter: Theory and experimental investigation on the effect of working environment on risk and time preferences," Journal of Risk and Uncertainty, Springer, vol. 43(3), pages 245-270, December.
  15. Börjesson, Maria & Eliasson, Jonas, 2014. "Experiences from the Swedish Value of Time study," Transportation Research Part A: Policy and Practice, Elsevier, vol. 59(C), pages 144-158.
  16. André De Palma & Robin Lindsey & Nathalie Picard, 2008. "Risk aversion, the value of information and traffic equilibrium," Working Papers hal-00349492, HAL.

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