Probabilistic choice set formation incorporating activity spaces into the context of mode and destination choice modelling

Understanding the constraints that individuals face during their spatial choices is important from a policy perspective. Such constraints, however, are often overlooked in the choice set generation process during model development. In order to address that gap, the current study proposes a probabilistic choice set formation based on Manski's framework assuming that the actual choice set of an individual is latent (unobserved). Though latent class models with heterogeneous choice sets have been used previously in the context of mode and route choice, their application in the context of spatial choices have been hindered due to the inherently large choice sets making the problem computationally intractable. To address this issue, we propose to computationally simplify the problem by utilising the geography-derived notions of Activity Spaces to delineate a range of potential choice sets per individual helping us to capture both issues of spatial awareness and time-space constraints. In order to account for the latent nature of the true choice set, we propose a Latent Class Choice Modelling (LCCM) framework to allocate the individuals probabilistically into the different resulting choice sets, with each class having a different choice set and a different set of parameters. Thus the LCCM is able to capture heterogeneity in the choice sets and in the sensitivities, at the same time. The proposed LCCM framework is empirically tested on joint mode and shopping destination choices captured through a GPS smartphone application. It is compared to a base MNL model estimated on the global choice set, an LCCM capturing heterogeneity only in the sensitivities and a LCCM with latent consideration choice sets, similarly to the proposed model, but with generic parameters across classes. Our proposed specification is able to outperform all of the remaining models, while also providing insights on the factors affecting individuals to be constrained in their location choices across space hinting to cases of spatial cognition, the importance of the home and workplace geography and the individual's socioeconomic status. Such insights can be important for developing more behaviourally realistic models that can be used by planners and policy makers to formulate more effective measures that better relate to the underlying population. Furthermore, the analysis provides insights into the discrepancies that can emerge by accounting for latent consideration sets in willingness-to-pay measures and demand elasticities, which could have significant implications in the effectiveness of policy measures.