Random Regret Minimization and Random Utility Maximization in the Presence of Preference Heterogeneity: An Empirical Contrast
Publication: Journal of Transportation Engineering
Volume 142, Issue 4
Abstract
Random regret minimization (RRM) interpretations of discrete choices are growing in popularity as a complementary modeling paradigm to random utility maximization (RUM). While behaviorally very appealing in the sense of accommodating the regret of not choosing the best alternative, studies to date suggest that the differences in willingness to pay estimates, choice elasticities, and choice probabilities compared to RUM are small. However, the evidence is largely based on a simple multinomial logit (MNL) form of the RRM model. This paper revisits this behavioral contrast and moves beyond the multinomial logit model to incorporate random parameters, revealing the presence of preference heterogeneity. The important contribution of this paper is to see if the extension of RRM-MNL to RRM-mixed logit in passenger mode choice widens the behavioral differences between RUM and RRM. The current paper has identified a statistically richer improvement in fit of mixed logit compared to multinomial logit under RRM (and RUM) but found small differences overall between the empirical outputs of RUM and RRM, with no basis of an improved model fit between these two nonnested model forms. The inclusion of both model forms should continue to inform the likely range of behavioral outputs during investigation of a broader range of process heuristics designed to capture real world behavioral response.
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Acknowledgments
The research contribution is linked to Australian Research Council grant DP140100909 (2014–2016): Integrating attribute decision heuristics into travel choice models that accommodate risk attitude and perceptual conditioning. The authors thank Caspar Chorus for ongoing dialogue and suggestions on RRM and very helpful comments from two referees.
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Published In
Journal of Transportation Engineering
Volume 142 • Issue 4 • April 2016
Copyright
© 2016 American Society of Civil Engineers.
History
Received: Apr 10, 2015
Accepted: Oct 14, 2015
Published online: Jan 19, 2016
Published in print: Apr 1, 2016
Discussion open until: Jun 19, 2016
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