Random Regret Minimization: Exploration of a New Choice Model for Environmental and Resource Economics

Mara Thiene, Marco Boeri, Caspar G. Chorus

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48 Citations (Scopus)
258 Downloads (Pure)

Abstract

This paper introduces the discrete choice model-paradigm of Random Regret Minimization (RRM) to the field of environmental and resource economics. The RRM-approach has been very recently developed in the context of travel demand modelling and presents a tractable, regret-based alternative to the dominant choice-modelling paradigm based on Random Utility Maximization-theory (RUM-theory). We highlight how RRM-based models provide closed form, logit-type formulations for choice probabilities that allow for capturing semi-compensatory behaviour and choice set-composition effects while being equally parsimonious as their utilitarian counterparts. Using data from a Stated Choice-experiment aimed at identifying valuations of characteristics of nature parks, we compare RRM-based models and RUM-based models in terms of parameter estimates, goodness of fit, elasticities and consequential policy implications.

Original languageEnglish
Pages (from-to)413-429
Number of pages17
JournalEnvironmental & resource economics
Volume51
Issue number3
Early online date08 Sep 2011
DOIs
Publication statusPublished - 2012

Keywords

  • random regret minimization
  • environmental and resource economics
  • preference analysis
  • choice behaviour

ASJC Scopus subject areas

  • Management, Monitoring, Policy and Law
  • Aerospace Engineering

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