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A Generalized Random Regret Minimization model

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  • Chorus, Caspar G.

Abstract

This paper presents, discusses and tests a Generalized Random Regret Minimization (G-RRM) model. The G-RRM model is created by recasting a fixed constant in the attribute-specific regret functions of the conventional RRM model, into an attribute-specific regret-weight. Given that regret-weights of different attributes can take on different values, the G-RRM model allows for additional flexibility when compared to the conventional RRM model, as it allows the researcher to capture choice behavior that equals that implied by, respectively, the canonical linear-in-parameters Random Utility Maximization (RUM) model, the conventional Random Regret Minimization (RRM) model, and hybrid RUM–RRM specifications. Furthermore, for particular values of the attribute-specific regret-weights, models are obtained where regret minimization (i.e., reference dependency and asymmetry of preferences) is present for the attribute, but in a less pronounced way than in a conventional RRM model. When regret-weights are written as binary logit functions, the G-RRM model can be estimated on choice data using conventional software packages. As an empirical proof of concept, the G-RRM model is estimated on a stated route choice dataset as well as on synthetic data, and its outcomes are compared with RUM, RRM, hybrid RUM–RRM and latent class counterparts.

Suggested Citation

  • Chorus, Caspar G., 2014. "A Generalized Random Regret Minimization model," Transportation Research Part B: Methodological, Elsevier, vol. 68(C), pages 224-238.
  • Handle: RePEc:eee:transb:v:68:y:2014:i:c:p:224-238
    DOI: 10.1016/j.trb.2014.06.009
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    References listed on IDEAS

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    1. Caspar Chorus, 2011. "Random Regret Minimization: An Overview of Model Properties and Empirical Evidence," Transport Reviews, Taylor & Francis Journals, vol. 32(1), pages 75-92, July.
    2. Mara Thiene & Marco Boeri & Caspar Chorus, 2012. "Random Regret Minimization: Exploration of a New Choice Model for Environmental and Resource Economics," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(3), pages 413-429, March.
    3. Chorus, Caspar G., 2012. "Logsums for utility-maximizers and regret-minimizers, and their relation with desirability and satisfaction," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(7), pages 1003-1012.
    4. Matthew J. Beck & Caspar G. Chorus & John M. Rose & David A. Hensher, 2013. "Vehicle Purchasing Behaviour of Individuals and Groups: Regret or Reward?," Journal of Transport Economics and Policy, University of Bath, vol. 47(3), pages 475-492, September.
    5. Boeri, Marco & Scarpa, Riccardo & Chorus, Caspar G., 2014. "Stated choices and benefit estimates in the context of traffic calming schemes: Utility maximization, regret minimization, or both?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 61(C), pages 121-135.
    6. Boeri, Marco & Longo, Alberto & Grisolía, José M. & Hutchinson, W. George & Kee, Frank, 2013. "The role of regret minimisation in lifestyle choices affecting the risk of coronary heart disease," Journal of Health Economics, Elsevier, vol. 32(1), pages 253-260.
    7. Hans-Ulrich Derlien & B. Guy Peters, 2008. "Introduction," Chapters,in: The State at Work, Volume 2, chapter 1 Edward Elgar Publishing.
    8. Chorus, Caspar G. & Arentze, Theo A. & Timmermans, Harry J.P., 2008. "A Random Regret-Minimization model of travel choice," Transportation Research Part B: Methodological, Elsevier, vol. 42(1), pages 1-18, January.
    9. Stephane Hess & Amanda Stathopoulos & Andrew Daly, 2012. "Allowing for heterogeneous decision rules in discrete choice models: an approach and four case studies," Transportation, Springer, vol. 39(3), pages 565-591, May.
    10. Stathopoulos, Amanda & Hess, Stephane, 2012. "Revisiting reference point formation, gains–losses asymmetry and non-linear sensitivities with an emphasis on attribute specific treatment," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(10), pages 1673-1689.
    11. Caspar Chorus & Michel Bierlaire, 2013. "An empirical comparison of travel choice models that capture preferences for compromise alternatives," Transportation, Springer, vol. 40(3), pages 549-562, May.
    12. Caspar G Chorus & John M Rose & David A Hensher, 2013. "Regret Minimization or Utility Maximization: It Depends on the Attribute," Environment and Planning B, , vol. 40(1), pages 154-169, February.
    13. Menezes, Flavio M., 2008. "An Introduction to Auction Theory," OUP Catalogue, Oxford University Press, number 9780199275991.
    14. Hess, Stephane & Stathopoulos, Amanda, 2013. "A mixed random utility — Random regret model linking the choice of decision rule to latent character traits," Journal of choice modelling, Elsevier, vol. 9(C), pages 27-38.
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    Citations

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    Cited by:

    1. van Cranenburgh, Sander & Prato, Carlo G., 2016. "On the robustness of random regret minimization modelling outcomes towards omitted attributes," Journal of choice modelling, Elsevier, vol. 18(C), pages 51-70.
    2. repec:kap:transp:v:45:y:2018:i:1:d:10.1007_s11116-016-9739-x is not listed on IDEAS
    3. repec:kap:transp:v:44:y:2017:i:5:d:10.1007_s11116-016-9691-9 is not listed on IDEAS
    4. van Cranenburgh, Sander & Guevara, Cristian Angelo & Chorus, Caspar G., 2015. "New insights on random regret minimization models," Transportation Research Part A: Policy and Practice, Elsevier, vol. 74(C), pages 91-109.
    5. repec:kap:netspa:v:17:y:2017:i:3:d:10.1007_s11067-017-9344-3 is not listed on IDEAS
    6. Shi An & Ze Wang & Jianxun Cui, 2015. "Integrating Regret Psychology to Travel Mode Choice for a Transit-Oriented Evacuation Strategy," Sustainability, MDPI, Open Access Journal, vol. 7(7), pages 1-16, June.
    7. repec:eee:eejocm:v:23:y:2017:i:c:p:21-33 is not listed on IDEAS

    More about this item

    Keywords

    Random Utility Maximization; Random Regret Minimization; Choice model; Generalized Random Regret Minimization;

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • M30 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - General
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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