Koster, P, Peer, S and Dekker, T (2015) Memory, expectation formation and scheduling choices. Economics of Transportation, 4 (4). pp. 256-265. ISSN 2212-0122
Abstract
Limited memory capacity, retrieval constraints and anchoring are central to expectation formation processes. We develop a model of adaptive expectations where individuals are able to store only a finite number of past experiences of a stochastic state variable. Retrieval of these experiences is probabilistic and subject to error. We apply the model to scheduling choices of commuters and demonstrate that memory constraints lead to sub-optimal choices. We analytically and numerically show how memory-based adaptive expectations may substantially increase commuters' willingness-to-pay for reductions in travel time variability, relative to the rational expectations outcome.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Editors: |
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Copyright, Publisher and Additional Information: | © 2015, Elsevier Ltd. This is an author produced version of a paper published in Economics of Transportation. Uploaded in accordance with the publisher's self-archiving policy. |
Keywords: | Memory; Transience; Expectation formation; Retrieval accuracy; Scheduling; Value of reliability |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Environment (Leeds) > Institute for Transport Studies (Leeds) > ITS: Economics and Discrete Choice (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 15 Oct 2015 12:51 |
Last Modified: | 03 Nov 2016 05:41 |
Published Version: | http://dx.doi.org/10.1016/j.ecotra.2015.09.001 |
Status: | Published |
Publisher: | Elsevier |
Identification Number: | 10.1016/j.ecotra.2015.09.001 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:90836 |