Estimating Risk Preferences in the Field

We survey the literature on estimating risk preferences using field data. We concentrate our attention on studies in which risk preferences are the focal object and estimating their structure is the core enterprise. We review a number of models of risk preferences—including both expected utility (EU) theory and non-EU models—that have been estimated using field data, and we highlight issues related to identification and estimation of such models using field data. We then survey the literature, giving separate treatment to research that uses individual-level data (e.g., property insurance data) and research that uses aggregate data (e.g., betting market data). We conclude by discussing directions for future research

Designing IS service strategy: an information acceleration approach

Information technology-based innovation involves considerable risk that requires insight and foresight. Yet, our understanding of how managers develop the insight to support new breakthrough applications is limited and remains obscured by high levels of technical and market uncertainty. This paper applies a new experimental method based on “discrete choice analysis” and “information acceleration” to directly examine how decisions are made in a way that is behaviourally sound. The method is highly applicable to information systems researchers because it provides relative importance measures on a common scale, greater control over alternate explanations and stronger evidence of causality. The practical implications are that information acceleration reduces the levels of uncertainty and generates a more accurate rationale for IS service strategy decisions

Assessing the Value of Time Travel Savings – A Feasibility Study on Humberside.

It is expected that the opening of the Humber Bridge will cause major changes to travel patterns around Humberside; given the level of tolls as currently stated, many travellers will face decisions involving a trade-off between travel time, money outlay on tolls or fares and money outlay on private vehicle running costs; this either in the context of destination choice, mode choice or route choice. This report sets out the conclusions of a preliminary study of the feasibility of inferring values of travel time savings from observations made on the outcomes of these decisions. Methods based on aggregate data of destination choice are found t o be inefficient; a disaggregate mode choice study i s recommended, subject to caveats on sample size

A Think Aloud Study Comparing the Validity and Acceptability of Discrete Choice and Best Worst Scaling Methods

Objectives This study provides insights into the validity and acceptability of Discrete Choice Experiment (DCE) and profile-case Best Worst Scaling (BWS) methods for eliciting preferences for health care in a priority-setting context. Methods An adult sample (N = 24) undertook a traditional DCE and a BWS choice task as part of a wider survey on Health Technology Assessment decision criteria. A ‘think aloud’ protocol was applied, whereby participants verbalized their thinking while making choices. Internal validity and acceptability were assessed through a thematic analysis of the decision-making process emerging from the qualitative data and a repeated choice task. Results A thematic analysis of the decision-making process demonstrated clear evidence of ‘trading’ between multiple attribute/levels for the DCE, and to a lesser extent for the BWS task. Limited evidence consistent with a sequential decision-making model was observed for the BWS task. For the BWS task, some participants found choosing the worst attribute/level conceptually challenging. A desire to provide a complete ranking from best to worst was observed. The majority (18,75%) of participants indicated a preference for DCE, as they felt this enabled comparison of alternative full profiles. Those preferring BWS were averse to choosing an undesirable characteristic that was part of a ‘package’, or perceived BWS to be less ethically conflicting or burdensome. In a repeated choice task, more participants were consistent for the DCE (22,92%) than BWS (10,42%) (p = 0.002). Conclusions This study supports the validity and acceptability of the traditional DCE format. Findings relating to the application of BWS profile methods are less definitive. Research avenues to further clarify the comparative merits of these preference elicitation methods are identified

A Copula-Based Joint Model of Commute Mode Choice and Number of Non-Work Stops during the Commute

At the time of publication A. Portoghese, E. Spissu, and I. Meloni were at University of Cagliari, and C.R. Bhat and N. Eluru were at the University of Texas at Austin.In this paper, in the spirit of a tour-based frame of analysis, we examine the commute mode choice and the number of non-work stops during the commute. Understanding the mode and activity stop dimensions of weekday commute travel is important since the highest level of weekday traffic congestion in urban areas occurs during the commute periods. The paper employs a copula-based joint multinomial logit – ordered modeling framework in which commute mode choice is modeled using a multinomial logit formulation and the number of commute stops is modeled using an ordered response formulation. The data used in this study are drawn from the “Time use” multipurpose survey conducted between 2002 and 2003 by the Turin Town Council and the Italian National Institute of Statistics (ISTAT) in the Greater Turin metropolitan area of Italy. The results highlight the importance of accommodating the inter-relationship between commute mode choice and commute stops behavior. The results also point to the stronger effect of household responsibilities and demographic characteristics in the Italian context compared to the US context.Civil, Architectural, and Environmental Engineerin

Traveller Behaviour: Decision making in an unpredictable world

This paper discusses the nature and consequences of uncertainty in transport systems. Drawing on work from a number of fields, it addresses travellers’ abilities to predict variable phenomena, their perception of uncertainty, their attitude to risk and the various strategies they might adopt in response to uncertainty. It is argued that despite the increased interest in the representation of uncertainty in transport systems, most models treat uncertainty as a purely statistical issue and ignore the psychological aspects of response to uncertainty. The principle theories and models currently used to predict travellers’ response to uncertainty are presented and number of alternative modelling approaches are outlined. It is argued that the current generation of predictive models do not provide an adequate basis for forecasting response to changes in the degree of uncertainty or for predicting the likely effect of providing additional information. A number of alternative modelling approaches are identified to deal with travellers’ acquisition of information, the definition of their choice set and their choice between the available options. The use of heuristic approaches is recommended as an alternative to more conventional probabilistic methods

An efficient and versatile approach to trust and reputation using hierarchical Bayesian modelling

In many dynamic open systems, autonomous agents must interact with one another to achieve their goals. Such agents may be self-interested and, when trusted to perform an action, may betray that trust by not performing the action as required. Due to the scale and dynamism of these systems, agents will often need to interact with other agents with which they have little or no past experience. Each agent must therefore be capable of assessing and identifying reliable interaction partners, even if it has no personal experience with them. To this end, we present HABIT, a Hierarchical And Bayesian Inferred Trust model for assessing how much an agent should trust its peers based on direct and third party information. This model is robust in environments in which third party information is malicious, noisy, or otherwise inaccurate. Although existing approaches claim to achieve this, most rely on heuristics with little theoretical foundation. In contrast, HABIT is based exclusively on principled statistical techniques: it can cope with multiple discrete or continuous aspects of trustee behaviour; it does not restrict agents to using a single shared representation of behaviour; it can improve assessment by using any observed correlation between the behaviour of similar trustees or information sources; and it provides a pragmatic solution to the whitewasher problem (in which unreliable agents assume a new identity to avoid bad reputation). In this paper, we describe the theoretical aspects of HABIT, and present experimental results that demonstrate its ability to predict agent behaviour in both a simulated environment, and one based on data from a real-world webserver domain. In particular, these experiments show that HABIT can predict trustee performance based on multiple representations of behaviour, and is up to twice as accurate as BLADE, an existing state-of-the-art trust model that is both statistically principled and has been previously shown to outperform a number of other probabilistic trust models

Choice modelling in the development of natural resource management strategies in NSW

Protecting environmental services generates social benefits. At the same time, private landholders supplying these benefits may face some costs. To provide these services efficiently, policy makers need information about community values for the environment as well as landholders’ costs. This study explores how choice modelling (a non-market valuation technique) is used to estimate comment values. These include use and non-use values for increasing environmental quality in NSW catchments. Non-market valuation techniques for estimating environmental values are reviewed. This is followed by a discussion of methodological aspects of the choice modelling technique and its potential as a regional planning tool for Catchment Management Authorities (CMA’s)Nonmarket valuation, choice modelling, trade-offs, bio-physical modelling, Environmental Economics and Policy, Land Economics/Use,