Economics, Econometrics and Finance
8 years ago

New model reveals how risk affects value of travel time savings

Journal of Advanced Transportation
Accommodating risk in the valuation of expected travel time savings
David A. Hensher, Zheng Li, John M. Rose

Paper Summary

Related papers

Economics, Econometrics and Finance
4 years ago

Negative decision weights in popular theory could lead to risky choices.

Monetary Models
Behavioral Economics
Macroeconomic Analysis
Decision Sciences
5 years ago

Gamblers and bookmakers defy traditional economic theories in decision-making study

Smart Manufacturing
Economics, Econometrics and Finance
8 years ago

Unlocking the Key to Making Better Choices: Expected Gain vs. Value

Discrete Choice
Multi-Criteria Decision

Valuing travel time savings is crucial for transportation planning. Researchers used a nonlinear probability weighting function to factor in risk when estimating travel time values. They found that including risk in the calculations slightly changes the value of travel time savings, but it can significantly impact time benefits for real projects. The model showed that people tend to overvalue rare outcomes and undervalue common outcomes when making travel time decisions.