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Spatial Choice: A Matter of Utility or Regret?

Author

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  • Caspar G Chorus

    (Section of Transport Policy and Logistics Organisation, Delft University of Technology, PO Box 2628, Delft, The Netherlands)

  • Theo A Arentze
  • Harry J P Timmermans

Abstract

This paper provides an empirical comparison between utility-maximization and regret-minimization perspectives of spatial-choice behaviour. The key difference between these two perspectives is that the regret-minimization perspective implies that the anticipated satisfaction associated with a chosen spatial alternative depends on the anticipated performance of nonchosen alternatives. In order to provide a meaningful statistical comparison, we formulate a model of regret minimization such that it reduces to utility maximization for a given parameter restriction. Estimation results, based on a binary stated travel-mode-choice experiment, show how the regret-based model outperforms its utilitarian counterpart. Furthermore it is shown how participants in the experiment attached relatively much weight to the situation where the nonchosen alternative is slightly better than the chosen one, and they tend to discount larger differences. We show how this concavity of the regret function is in line with the prospect theoretical notion of risk-seeking behaviour in the domain of losses.

Suggested Citation

  • Caspar G Chorus & Theo A Arentze & Harry J P Timmermans, 2009. "Spatial Choice: A Matter of Utility or Regret?," Environment and Planning B, , vol. 36(3), pages 538-551, June.
    • Handle: RePEc:sae:envirb:v:36:y:2009:i:3:p:538-551
    DOI: 10.1068/b34092
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    References listed on IDEAS

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    Cited by:

    1. Qi Han & Theo Arentze & Harry J P Timmermans, 2013. "Learning and Affective Responses in Location-Choice Dynamics," Environment and Planning B, , vol. 40(1), pages 78-94, February.
    2. Boeri, Marco & Longo, Alberto & Grisolía, José M. & Hutchinson, W. George & Kee, Frank, 2013. "The role of regret minimisation in lifestyle choices affecting the risk of coronary heart disease," Journal of Health Economics, Elsevier, vol. 32(1), pages 253-260.
    3. Caspar Chorus, 2011. "Random Regret Minimization: An Overview of Model Properties and Empirical Evidence," Transport Reviews, Taylor & Francis Journals, vol. 32(1), pages 75-92, July.
    4. Soora Rasouli & Harry J P Timmermans, 2014. "Uncertain Travel Times and Activity Schedules under Conditions of Space-Time Constraints and Invariant Choice Heuristics," Environment and Planning B, , vol. 41(6), pages 1022-1030, December.
    5. Longo, Alberto & Boeri, Marco, 2014. "Information, Random Regret Minimisation, Random Utility Maximisation: Willingness to pay for Renewable Energy," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182670, European Association of Agricultural Economists.
    6. Isabelle Cadoret & Emma Galli & Fabio Padovano, 2021. "Environmental taxation: Pigouvian or Leviathan?," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 48(1), pages 37-51, March.
    7. Sunghoon Jang & Soora Rasouli & Harry Timmermans, 2018. "Accounting for cognitive effort in random regret-only models: Effect of attribute variation and choice set size," Environment and Planning B, , vol. 45(5), pages 842-863, September.
    8. Caspar G Chorus & John M Rose & David A Hensher, 2013. "Regret Minimization or Utility Maximization: It Depends on the Attribute," Environment and Planning B, , vol. 40(1), pages 154-169, February.
    9. Mara Thiene & Marco Boeri & Caspar Chorus, 2012. "Random Regret Minimization: Exploration of a New Choice Model for Environmental and Resource Economics," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(3), pages 413-429, March.

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