A mixed random utility - Random regret model linking the choice of decision rule to latent character traits

An increasing number of studies are concerned with the use of alternatives to random utility maximisation as a decision rule in choice models, with a particular emphasis on regret minimisation over the last few years. The initial focus was on revealing which paradigm fits best for a given dataset, while later studies have looked at variation in decision rules across respondents within a dataset. However, only limited effort has gone towards understanding the potential drivers of decision rules, i.e. what makes it more or less likely that the choices of a given respondent can be explained by a particular paradigm. The present paper puts forward the notion that unobserved character traits can be a key source of this type of heterogeneity and proposes to characterise these traits through a latent variable within a hybrid framework. In an empirical application on stated choice data, we make use of a mixed random utility-random regret structure, where the allocation to a given class is driven in part by a latent variable which at the same time explains respondents' stated satisfaction with their real world commute journey. Results reveal a linkage between the likely decision rule and the stated satisfaction with the real world commute conditions. Notably, the most regret-prone respondents in our sample are more likely to have aligned their real-life commute performance more closely with their aspirational values

Random regret minimization for consumer choice modeling: assessment of empirical evidence

This paper introduces to the field of marketing a regret-based discrete choice model for the analysis of multi-attribute consumer choices from multinomial choice sets. This random regret minimization (RRM) model, which has recently been introduced in the field of transport, forms a regret-based counterpart of the canonical random utility maximization (RUM) paradigm. This paper assesses empirical results based on 43 comparisons reported in peer-reviewed journal articles and book chapters, with the aim of finding out to what extent, when, and how RRM can form a viable addition to the consumer choice modeler's toolkit. The paper shows that RRM and hybrid RRM-RUM models outperform RUM counterparts in a majority of cases, in terms of model fit and predictive ability. Although differences in performance are quite small, the two paradigms often result in markedly different managerial implications due to considerable differences in, for example, market share forecasts

Presentation by the University of Nevada, Las Vegas: College of Fine Arts

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Contrasts between utility maximisation and regret minimisation in the presence of opt out alternatives

An increasing number of studies of choice behaviour are looking at Random Regret Minimisation (RRM) as an alternative to the well established Random Utility Maximisation (RUM) framework. Empirical evidence tends to show small differences in performance between the two approaches, with the implied preference between the models being dataset specific. In the present paper, we discuss how in the context of choice tasks involving an opt out alternative, the differences are potentially more clear cut. Specifically, we hypothesise that when opt out alternatives are framed as a rejection of all the available alternatives, this is likely to have a detrimental impact on the performance of RRM, while the performance of RUM suffers more than RRM when the opt out is framed as a respondent being indifferent between the alternatives on offer. We provide empirical support for these hypotheses through two case studies, using the two different types of opt out alternatives. Our findings suggest that analysts need to carefully evaluate their choice of model structure in the presence of opt out alternatives, while any a priori preference for a given model structure should be taken into account in survey framing

To use or not to use? An empirical study of pre-trip public transport information for business and leisure trips and comparison with car travel

This quantitative study provides more insight into the relative strength of various factors affecting the use and non-use of pre-trip Public Transport (PT) information for business and leisure trips. It also illuminates comparing car with public transport and its consequences for mode choice. The factors affecting PT information use most strongly are travel behaviour and sociodemographics, but travel attitudes, information factors, and social surrounding also play a role. Public transport use and PT . information use are closely connected, with travel behaviour having a stronger impact on information use than vice versa. Information service providers are recommended to market PT information simultaneously with public transport use. © 2011