How Income and Risk Preferences Shape Travel Choices under Uncertainty: Insights from a Multiround Game

Abstract

With the development of multimodal transportation systems, travelers face various choices to decide how to travel from one place to another. Given uncertainty, former experience, and individual characteristics such as income level and risk preference, a multiround decision-making model based on cumulative prospect theory (CPT) is proposed. This model was tested through a series of behavioral experiments conducted on the oTree platform, which involved participants making travel mode choices across multiple iterations. The experiment was designed with three income levels: low, medium, and high; three risk preferences: risk aversion, risk neutral, and risk lover; and two scenarios: under urgent event and nonurgent event. The experiments were successful in highlighting the influence of previous experience on mode choice, with subjects displaying varying degrees of sensitivity to tardiness and 33% of subjects displaying insensitivity. The data obtained from the experiment were used for model fitting. Then the effects of travel time, fare, and travel time reliability on different income groups were estimated under various situations. The reference points of CPT were set based on heterogeneous groups and adjusted each round to achieve a subjective and dynamic effect. The results show that in urgent scenarios, medium-income groups have the highest value of time (VOT) of 5.74 RMB/min. Moreover, high incomes have the value of reliability (VOR) of −19.52 RMB/min, indicating they are willing to pay an additional cost of 19.52 RMB per minute for choosing a reliable mode. These results facilitate discussions on how to guide travelers toward green travel modes and what strategies enterprises can adopt to attract travelers. This model has the potential to enhance urban traffic management and policy development tailored to diverse traveler groups.