A Rank-dependent Scheduling Model
This paper proposes an analytical framework for the scheduling decisions of road travellers that takes into account probability weighting using rank-dependent utility theory. The fundamental difference with the standard scheduling model based on expected utility is that the probabilities of arrivals are treated in a non-linear way. This paper shows how scheduling decisions are affected by the weighted probabilities of the traveller. We derive the costs of non-optimal chosen departure times because of probability weighting and show that if the parameterised probability weighting function is similar to what has been found for gambling, the costs of probability weighting for morning peak car travellers are around 3 per cent. For the full range of parameters tested, we find costs in the range of 0-24 per cent of total travel costs. © 2012 LSE and the University of Bath
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Li, Zheng & Hensher, David A. & Rose, John M., 2010. "Willingness to pay for travel time reliability in passenger transport: A review and some new empirical evidence," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(3), pages 384-403, May.
- Quiggin, John, 1982. "A theory of anticipated utility," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 323-343, December.
- De Borger, Bruno & Fosgerau, Mogens, 2008. "The trade-off between money and travel time: A test of the theory of reference-dependent preferences," Journal of Urban Economics, Elsevier, vol. 64(1), pages 101-115, July.
- Frederick Mosteller & Philip Nogee, 1951. "An Experimental Measurement of Utility," Journal of Political Economy, University of Chicago Press, vol. 59, pages 371-371.
- Gijs Kuilen, 2009. "Subjective Probability Weighting and the Discovered Preference Hypothesis," Theory and Decision, Springer, vol. 67(1), pages 1-22, July.
- Wakker,Peter P., 2010.
Cambridge University Press, number 9780521765015, August.
- Wakker,Peter P., 2010. "Prospect Theory," Cambridge Books, Cambridge University Press, number 9780521748681, October.
- Fosgerau, Mogens & Karlström, Anders, 2010. "The value of reliability," Transportation Research Part B: Methodological, Elsevier, vol. 44(1), pages 38-49, January.