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    Random regret minimization or random utility maximization: An exploratory analysis in the context of automobile fuel choice

    Access Status
    Fulltext not available
    Authors
    Hensher, D.
    Greene, William
    Chorus, C.
    Date
    2013
    Type
    Journal Article
    
    Metadata
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    Citation
    Hensher, D. and Greene, W. and Chorus, C. 2013. Random regret minimization or random utility maximization: An exploratory analysis in the context of automobile fuel choice. Journal of Advanced Transportation. 47 (7): pp. 667-678.
    Source Title
    Journal of Advanced Transportation
    DOI
    10.1002/atr.188
    ISSN
    0197-6729
    School
    School of Economics and Finance
    URI
    http://hdl.handle.net/20.500.11937/40541
    Collection
    • Curtin Research Publications
    Abstract

    Interest in alternative behavioural paradigms to random utility maximization (RUM) has existed ever since the dominance of the RUM formulation. One alternative is known as random regret minimization (RRM), which suggests that when choosing between alternatives, decision makers aim to minimize anticipated regret. Although the idea of regret is not new, its incorporation into the same discrete choice framework of RUM is very recent. This paper is the first to apply the RRM-model framework to model choice amongst durable goods. Specifically, we estimate and compare the RRM and RUM models in a stated choice context of choosing amongst vehicles fuelled with petrol, diesel and hybrid (associated with specific levels of fuel efficiency and engine capacity). The RRM model is found to achieve a marginally better fit (using a non-nested test of differences) than its equally parsimonious RUM counterpart. As a second contribution, we derive a formulation for regret-based elasticities and compare utility-based and regret-based elasticities in the context of stated vehicle type choices. We find that in the context of our choice data, mean estimates of elasticities are different for many of the attributes and alternatives. Copyright © 2011 John Wiley & Sons, Ltd. Copyright © 2011 John Wiley & Sons, Ltd.

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