Expected Utility Theory, Prospect Theory, and Regret Theory Compared for Prediction of Route Choice Behavior

Abstract

Various decision theories have been used to explain travelers' behavior. This paper presents a comparative analysis from the points of view of theory and application of the expected utility theory, prospect theory, and regret theory. The application was based on an empirical data set on route choice behavior with and without information provision. Results show that despite the widespread use of expected utility theory to model travelers' behavior, the use of prospect theory is quite appropriate and promising, especially when information is provided. The reference point plays an important role in the prediction ability of prospect theory. The greatest prediction ability occurs when the reference point is aligned with the observed behavior and thus reinforces the necessity of establishing appropriate and meaningful values. This study empirically shows the potential of alternatives to expected utility theory to capture travelers' behavior better, as in the case of prospect theory under the proposed model specification, but this is not necessarily true, as demonstrated by the results obtained by use of regret theory.