The use of Prospect Theory to model route choice has increased in the past decades. The main application issue is how to define the reference point, i.e., the value that travellers use as a reference to distinguish gains and losses in the experienced travel times. Moreover, the question can be asked whether all travellers have the same reference point or whether heterogeneity in their behaviour plays an important role. This paper aims to (i) provide a behavioural interpretation of the reference point, (ii) investigate the role of heterogeneity in the reference point and (iii) discuss how to take heterogeneity into account. These aspects are discussed with the aid of an empirical route choice experiment and a model specification in which travel time is the main variable. Two model frameworks are proposed, one accounting for heterogeneity and another considering no heterogeneity in travellers' behaviour, and their outcomes are compared. Results show improvements in the ability of Prospect Theory to predict route choice behaviour by accounting for heterogeneity in the reference point. This is particularly the case when the reference point reflects travelers' route preferences. Statistical analyses show the significance of accounting for heterogeneity in travellers' behaviour. Thus, we cannot reject the hypothesis that heterogeneity leads to improvements in the prediction ability of Prospect Theory.
- Prospect theory
- Reference point
- Travel behaviour and heterogeneity