Private Capital Investment Behaviors in Public Transport Based on Prospect Theory

Considering the bounded rationality of investors in reality, this study analyzed the private investment decision behaviors in public transport based on prospect theory. The study took the minimum expected gain of investors as the reference point, considered the total return and investment of the project, the investment ratio and return ratio of investors, the intervention cost and decision weight, then constructed an investor prospect model. The numerical example shows that different reference points can affect the prospect values, leading to changes in the ranking of decision options, indicating that reference points play an important role in investors’ investment decisions. If the probability of obtaining high returns cannot be guaranteed, investors tend to choose low return and low-risk strategies, indicating that investors usually have a loss aversion mentality when making decisions. In order to attract private investment in public transport and improve the success rate of private investment in public transport, managers should develop flexible incentive mechanisms to provide investors with corresponding incentives to ensure the probability of obtaining returns. Compared with the expected utility theory, the prospect theory can better reflect the subjective differences in decision-making and is more consistent with real decisions.