Reference point and stochastic equilibrium
Full project title: The effect of reference point on stochastic network equilibrium
Sponsor: Faculty of the Built Environment (now known as the College of Arts, Technology and Environment), UWE Bristol
Researcher: Dr Erel Avineri
Start date: January 2005
Finish date: December 2005
Project briefing sheet: Download the briefing sheet document (PDF)
Following studies of human decision-making under risk and uncertainty, extensive evidence of loss aversion and asymmetric risk-taking behaviour around a reference point was found. This work presents an investigation of the effect of the reference point value on the stochastic network equilibrium.
Prospect Theory proposes an alternative to the traditional risk taking modelling in travel behaviour, which might be too simplistic. The sensitivity of stochastic network equilibrium to the value of the reference point, and the potential of a Prospect Theory approach has been demonstrated.