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A Portfolio Theory of Route Choice

  • Shanjiang Zhu
  • David Levinson

    ()

    (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)

Although many individual route choice models have been proposed to incorporate travel time variability as a decision factor, they are typically still deterministic in the sense that the optimal strategy requires choosing one particular route that maximizes utility. In contrast, this study introduces an individual route choice model where choosing a portfolio of routes instead of a single route is the best strategy for a rational traveler who cares about both journey time and lateness when facing stochastic network conditions. The model is then tested with GPS data collected in metropolitan Minneapolis-St. Paul, Minnesota. Our data suggest strong correlation among link speed when analyzing morning commute trips. There is no single dominant route (defined here as a route with the shortest travel time for a 15 day period) in 18% of cases when links travel times are correlated. This paper demonstrates that choosing a portfolio of routes could be the rational choice of a traveler who wants to optimize route decisions under variability.

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File URL: http://hdl.handle.net/11299/180035
File Function: Second version, 2013
Download Restriction: no

Paper provided by University of Minnesota: Nexus Research Group in its series Working Papers with number 000096.

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Date of creation: 2011
Date of revision:
Publication status: Published in Transportation Research part C Volume 35, October 2013, Pages 232–243
Handle: RePEc:nex:wpaper:portfoliotheory
Contact details of provider: Postal:
Dept. of Civil Engineering, 500 Pillsbury Drive SE, Minneapolis, MN 55455

Phone: +01 (612) 625-6354
Fax: +01 (612) 626-7750
Web page: http://nexus.umn.edu

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  1. André de Palma & Nathalie Picard, 2006. "Route Choice Behaviour with Risk-Averse Users," Chapters, in: Spatial Dynamics, Networks and Modelling, chapter 7 Edward Elgar Publishing.
  2. Brownstone, David & Small, Kenneth A., 2005. "Valuing time and reliability: assessing the evidence from road pricing demonstrations," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(4), pages 279-293, May.
  3. Harry Markowitz, 1952. "The Utility of Wealth," Journal of Political Economy, University of Chicago Press, vol. 60, pages 151.
  4. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
  5. Kenneth A. Small & Clifford Winston & Jia Yan, 2005. "Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability," Econometrica, Econometric Society, vol. 73(4), pages 1367-1382, 07.
  6. Robert B. Noland & John W. Polak, 2002. "Travel time variability: A review of theoretical and empirical issues," Transport Reviews, Taylor & Francis Journals, vol. 22(1), pages 39-54, January.
  7. Shanjiang Zhu & David Levinson & Henry Liu, 2009. "Measuring Winners and Losers from the new I-35W Mississippi River Bridge," Working Papers 000066, University of Minnesota: Nexus Research Group.
  8. Kamarianakis, Yiannis & Prastacos, Poulicos, 2002. "Space-time modeling of traffic flow," ERSA conference papers ersa02p141, European Regional Science Association.
  9. Spiess, Heinz & Florian, Michael, 1989. "Optimal strategies: A new assignment model for transit networks," Transportation Research Part B: Methodological, Elsevier, vol. 23(2), pages 83-102, April.
  10. Whittaker, Joe & Garside, Simon & Lindveld, Karel, 1997. "Tracking and predicting a network traffic process," International Journal of Forecasting, Elsevier, vol. 13(1), pages 51-61, March.
  11. Shlomo Bekhor & Moshe Ben-Akiva & M. Ramming, 2006. "Evaluation of choice set generation algorithms for route choice models," Annals of Operations Research, Springer, vol. 144(1), pages 235-247, April.
  12. Frejinger, E. & Bierlaire, M., 2007. "Capturing correlation with subnetworks in route choice models," Transportation Research Part B: Methodological, Elsevier, vol. 41(3), pages 363-378, March.
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