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On the other half of the story: allowing for discrete penalties for excessive travel times in scheduling models

In this paper, we introduce a discrete penalty for excessive travel times into scheduling models whose maximal expected utilities have attractive theoretical features of linearity in standard deviation or variance. The extended models maintain the properties of linearity, and its maximal expected utility depends on the shape of the travel time distribution. The value of travel time and its variability could be measured indirectly by the scheduling preferences. The results from empirical data reveal that the extended models, with such a discrete penalty, provide a highly significant better goodness of fit to the data. Furthermore, introducing the penalty for excessive travel time has a strong effect on the estimates of the other scheduling parameters, thus affecting the valuations of travel time. Our findings indicate that, apart from the mean and standard deviation (or variance), individuals value other characteristics of travel time distribution, in particular the probability of excessive travel time.

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File URL: http://www.transportportal.se/swopec/CTS2013-15.pdf
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Paper provided by CTS - Centre for Transport Studies Stockholm (KTH and VTI) in its series Working papers in Transport Economics with number 2013:15.

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Length: 21 pages
Date of creation: 19 Sep 2013
Date of revision:
Handle: RePEc:hhs:ctswps:2013_015
Note: This paper is presented on internal and external seminars, and presented at the annual conference of the International Association of transportation Economics (ITEA Kuhmo Nectar), in Berlin June 2012.
Contact details of provider: Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Web page: http://www.cts.kth.se/

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  1. Fosgerau, Mogens & Karlström, Anders, 2010. "The value of reliability," Transportation Research Part B: Methodological, Elsevier, vol. 44(1), pages 38-49, January.
  2. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-60, May.
  3. Yin-yen Tseng & Erik Verhoef, 2007. "Value of Time by Time of Day: A Stated-Preference Study," Tinbergen Institute Discussion Papers 07-061/3, Tinbergen Institute, revised 08 Nov 2007.
  4. Börjesson, Maria & Eliasson, Jonas & Franklin, Joel, 2012. "Valuations of travel time variability in scheduling versus mean-variance models," Working papers in Transport Economics 2012:2, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
  5. Small, Kenneth A, 1982. "The Scheduling of Consumer Activities: Work Trips," American Economic Review, American Economic Association, vol. 72(3), pages 467-79, June.
  6. Jenelius, Erik, 2012. "The value of travel time variability with trip chains, flexible scheduling and correlated travel times," Transportation Research Part B: Methodological, Elsevier, vol. 46(6), pages 762-780.
  7. Fosgerau, Mogens & Engelson, Leonid, 2011. "The value of travel time variance," Transportation Research Part B: Methodological, Elsevier, vol. 45(1), pages 1-8, January.
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