Risk Aversion in Travel Mode Choice with Rank-Dependent Utility

Abstract

Using 2004 stated preference data on travel mode collected in the Zürich area, different parametric specifications of the rank-dependent utility function in a logit mixture model show that commuters are weakly averse to small-time losses. The results also justify Yaari's dual theory of choice under risk, that the utility function is linear on outcomes but that the perception of corresponding probabilities is biased. For leisure travel, the travelers are risk neutral to small losses of time.