IDEAS home Printed from https://ideas.repec.org/a/spr/mathme/v87y2018i2d10.1007_s00186-017-0619-8.html
   My bibliography  Save this article

A commuter departure-time model based on cumulative prospect theory

Author

Listed:
  • Guang Yang

    (Southeast University)

  • Xinwang Liu

    (Southeast University)

Abstract

With a focus on planning of departure times during peak hours for commuters, an optimal arrival-time choice is derived using cumulative prospect theory. The model is able to explain the influence of behavioral characteristics on the choice of departure time. First, optimal solutions are derived explicitly for both early and late-arrival prospects. It is shown that the optimal solution is a function of a subjective measure, namely, the gain–loss ratio (GLR), indicating that the actual arrival time of a commuter depends on his or her attitude to the deviation between gains and losses. Some properties of the optimal solution and the GLR are discussed. These properties suggest that the more that the pleasure of gain exceeds the pain of loss, the greater the correlation between actual and preferred arrival times. Finally, a sensitivity analysis of the results is performed, and the use of the model is illustrated with a numerical example based on a skew-normal distribution.

Suggested Citation

  • Guang Yang & Xinwang Liu, 2018. "A commuter departure-time model based on cumulative prospect theory," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 87(2), pages 285-307, April.
    • Handle: RePEc:spr:mathme:v:87:y:2018:i:2:d:10.1007_s00186-017-0619-8
    DOI: 10.1007/s00186-017-0619-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s00186-017-0619-8
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s00186-017-0619-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Li-Jun Tian & Hai-Jun Huang & Zi-You Gao, 2012. "A Cumulative Perceived Value-Based Dynamic User Equilibrium Model Considering the Travelers’ Risk Evaluation on Arrival Time," Networks and Spatial Economics, Springer, vol. 12(4), pages 589-608, December.
    2. Jona Linde & Joep Sonnemans, 2012. "Social comparison and risky choices," Journal of Risk and Uncertainty, Springer, vol. 44(1), pages 45-72, February.
    3. Richard H. Thaler & Amos Tversky & Daniel Kahneman & Alan Schwartz, 1997. "The Effect of Myopia and Loss Aversion on Risk Taking: An Experimental Test," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 647-661.
    4. Y-L Chen & L-J Hsiao & K Tang, 2003. "Time analysis for planning a path in a time-window network," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 54(8), pages 860-870, August.
    5. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    6. Nicholas Barberis & Ming Huang, 2008. "Stocks as Lotteries: The Implications of Probability Weighting for Security Prices," American Economic Review, American Economic Association, vol. 98(5), pages 2066-2100, December.
    7. Camerer, Colin F & Ho, Teck-Hua, 1994. "Violations of the Betweenness Axiom and Nonlinearity in Probability," Journal of Risk and Uncertainty, Springer, vol. 8(2), pages 167-196, March.
    8. Caspar Chorus & Theo Arentze & Harry Timmermans, 2007. "Information impact on quality of multimodal travel choices: conceptualizations and empirical analyses," Transportation, Springer, vol. 34(6), pages 625-645, November.
    9. Xue Dong He & Xun Yu Zhou, 2011. "Portfolio Choice Under Cumulative Prospect Theory: An Analytical Treatment," Management Science, INFORMS, vol. 57(2), pages 315-331, February.
    10. Henn, Vincent & Ottomanelli, Michele, 2006. "Handling uncertainty in route choice models: From probabilistic to possibilistic approaches," European Journal of Operational Research, Elsevier, vol. 175(3), pages 1526-1538, December.
    11. Copeland, Phyllis V. & Cuccia, Andrew D., 2002. "Multiple Determinants of Framing Referents in Tax Reporting and Compliance," Organizational Behavior and Human Decision Processes, Elsevier, vol. 88(1), pages 499-526, May.
    12. Hino, Yuki & Nagatani, Takashi, 2015. "Asymmetric effect of route-length difference and bottleneck on route choice in two-route traffic system," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 428(C), pages 416-425.
    13. Erel Avineri, 2006. "The Effect of Reference Point on Stochastic Network Equilibrium," Transportation Science, INFORMS, vol. 40(4), pages 409-420, November.
    14. Xu, Hongli & Lou, Yingyan & Yin, Yafeng & Zhou, Jing, 2011. "A prospect-based user equilibrium model with endogenous reference points and its application in congestion pricing," Transportation Research Part B: Methodological, Elsevier, vol. 45(2), pages 311-328, February.
    15. C Wu & H-L Chen, 2000. "A consumer purchasing model with learning and departure behaviour," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 51(5), pages 583-591, May.
    16. Soriguera, Francesc, 2014. "On the value of highway travel time information systems," Transportation Research Part A: Policy and Practice, Elsevier, vol. 70(C), pages 294-310.
    17. Adrian Bruhin & Helga Fehr-Duda & Thomas Epper, 2010. "Risk and Rationality: Uncovering Heterogeneity in Probability Distortion," Econometrica, Econometric Society, vol. 78(4), pages 1375-1412, July.
    18. Drazen Prelec, 1998. "The Probability Weighting Function," Econometrica, Econometric Society, vol. 66(3), pages 497-528, May.
    19. Manel Baucells & Martin Weber & Frank Welfens, 2011. "Reference-Point Formation and Updating," Management Science, INFORMS, vol. 57(3), pages 506-519, March.
    20. Short, Jeremy C. & Palmer, Timothy B., 2003. "Organizational performance referents: An empirical examination of their content and influences," Organizational Behavior and Human Decision Processes, Elsevier, vol. 90(2), pages 209-224, March.
    21. Jou, Rong-Chang & Kitamura, Ryuichi & Weng, Mei-Chuan & Chen, Chih-Cheng, 2008. "Dynamic commuter departure time choice under uncertainty," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(5), pages 774-783, June.
    22. Mohammed Abdellaoui, 2000. "Parameter-Free Elicitation of Utility and Probability Weighting Functions," Management Science, INFORMS, vol. 46(11), pages 1497-1512, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Geng, Kexin & Wang, Yacan & Cherchi, Elisabetta & Guarda, Pablo, 2023. "Commuter departure time choice behavior under congestion charge: Analysis based on cumulative prospect theory," Transportation Research Part A: Policy and Practice, Elsevier, vol. 168(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jakusch, Sven Thorsten & Meyer, Steffen & Hackethal, Andreas, 2019. "Taming models of prospect theory in the wild? Estimation of Vlcek and Hens (2011)," SAFE Working Paper Series 146, Leibniz Institute for Financial Research SAFE, revised 2019.
    2. Xu, Hongli & Lou, Yingyan & Yin, Yafeng & Zhou, Jing, 2011. "A prospect-based user equilibrium model with endogenous reference points and its application in congestion pricing," Transportation Research Part B: Methodological, Elsevier, vol. 45(2), pages 311-328, February.
    3. Filiz-Ozbay, Emel & Guryan, Jonathan & Hyndman, Kyle & Kearney, Melissa & Ozbay, Erkut Y., 2015. "Do lottery payments induce savings behavior? Evidence from the lab," Journal of Public Economics, Elsevier, vol. 126(C), pages 1-24.
    4. Epper, Thomas & Fehr-Duda, Helga, 2017. "A Tale of Two Tails: On the Coexistence of Overweighting and Underweighting of Rare Extreme Events," Economics Working Paper Series 1705, University of St. Gallen, School of Economics and Political Science.
    5. Miles S. Kimball & Collin B. Raymond & Jiannan Zhou & Junya Zhou & Fumio Ohtake & Yoshiro Tsutsui, 2024. "Happiness Dynamics, Reference Dependence, and Motivated Beliefs in U.S. Presidential Elections," NBER Working Papers 32078, National Bureau of Economic Research, Inc.
    6. Stephen G Dimmock & Roy Kouwenberg & Olivia S Mitchell & Kim Peijnenburg, 2021. "Household Portfolio Underdiversification and Probability Weighting: Evidence from the Field," Review of Financial Studies, Society for Financial Studies, vol. 34(9), pages 4524-4563.
    7. Jou, Rong-Chang & Chen, Ke-Hong, 2013. "An application of cumulative prospect theory to freeway drivers’ route choice behaviours," Transportation Research Part A: Policy and Practice, Elsevier, vol. 49(C), pages 123-131.
    8. Li, Xue-yan & Li, Xue-mei & Yang, Lingrun & Li, Jing, 2018. "Dynamic route and departure time choice model based on self-adaptive reference point and reinforcement learning," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 502(C), pages 77-92.
    9. Ryan O. Murphy & Robert H. W. ten Brincke, 2018. "Hierarchical Maximum Likelihood Parameter Estimation for Cumulative Prospect Theory: Improving the Reliability of Individual Risk Parameter Estimates," Management Science, INFORMS, vol. 64(1), pages 308-328, January.
    10. Eyal Baharad & Doron Kliger, 2013. "Market failure in light of non-expected utility," Theory and Decision, Springer, vol. 75(4), pages 599-619, October.
    11. Özalp Özer & Yanchong Zheng, 2016. "Markdown or Everyday Low Price? The Role of Behavioral Motives," Management Science, INFORMS, vol. 62(2), pages 326-346, February.
    12. Mary Riddel, 2012. "Comparing risk preferences over financial and environmental lotteries," Journal of Risk and Uncertainty, Springer, vol. 45(2), pages 135-157, October.
    13. Victor H. Gonzalez-Jimenez, 2019. "Contracting Probability Distortions," Vienna Economics Papers vie1901, University of Vienna, Department of Economics.
    14. Thomas Epper & Helga Fehr-Duda, 2012. "The missing link: unifying risk taking and time discounting," ECON - Working Papers 096, Department of Economics - University of Zurich, revised Oct 2018.
    15. Phillips Peter J. & Pohl Gabriela, 2018. "The Deferral of Attacks: SP/A Theory as a Model of Terrorist Choice when Losses Are Inevitable," Open Economics, De Gruyter, vol. 1(1), pages 71-85, February.
    16. Li-Jun Tian & Hai-Jun Huang & Zi-You Gao, 2012. "A Cumulative Perceived Value-Based Dynamic User Equilibrium Model Considering the Travelers’ Risk Evaluation on Arrival Time," Networks and Spatial Economics, Springer, vol. 12(4), pages 589-608, December.
    17. Anna Conte & Peter G. Moffatt & Mary Riddel, 2015. "Heterogeneity in risk attitudes across domains: A bivariate random preference approach," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 15-10, School of Economics, University of East Anglia, Norwich, UK..
    18. B. Douglas Bernheim & Charles Sprenger, 2020. "On the Empirical Validity of Cumulative Prospect Theory: Experimental Evidence of Rank‐Independent Probability Weighting," Econometrica, Econometric Society, vol. 88(4), pages 1363-1409, July.
    19. Harris, Richard D. F. & Mazibas, Murat, 2022. "Portfolio optimization with behavioural preferences and investor memory," European Journal of Operational Research, Elsevier, vol. 296(1), pages 368-387.
    20. Arjun Chatrath & Rohan A. Christie‐David & Hong Miao & Sanjay Ramchander, 2019. "Losers and prospectors in the short‐term options market," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 39(6), pages 721-743, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:mathme:v:87:y:2018:i:2:d:10.1007_s00186-017-0619-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.