Risky weighting in discrete choice

This paper presents a new approach to discrete choice analysis for risky prospects. Conventional discrete choice analysis focuses on riskless prospects and does not deal with the scenario where the alternatives that the decision-makers choose from are associated with risk. In this paper, we investigate decision-makers’ risk perception and choice behaviour in choice experiments when they are facing several risky prospects. We propose a broad class of cumulative risky weighting functions, upon which a unified cumulative risky weighting function is developed. We show that this unified cumulative risky weighting function includes several existing cumulative risky weighting functions as special cases. We then develop a multivariate method for choice analysis with risky prospects to account for decision-makers’ individual-specific risk perception and the impact of various factors on the value function respectively. We illustrate the developed method using an empirical study on road tolling in Australia.

Media Info

  • Pagination: 43p
  • Serial:
    • Issue Number: ITLS-WP-17-10

Subject/Index Terms

Filing Info

  • Accession Number: 01638147
  • Record Type: Publication
  • Source Agency: ARRB
  • Files: ITRD, ATRI
  • Created Date: Jun 19 2017 10:58AM