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1.7. Conclusions and Discussion

In this chapter, we discussed the history of the development and application of models of bounded rationality with special reference to travel behaviour research and decision-making under conditions of certainty. We defined bounded rationality as decision-making processes and choice behaviour in which individuals do not seek the optional choice and/or consider only a subset of the potentially influential attributes, and/or in comparing choice alternatives do not differentiate between asymptotically small differences in attribute/alternative values, and/or do not consider all alternatives in the choice set, based on maximizing their overall judgments. These conditions were used to structure the chapter.

Attempts to model consideration of a subset of potentially influential factors are generally confined to the formulation of non-compensatory choice models and decision rules. These models have in common that after some screening process, only a single or a subset of attributes remains. In principle, these models can be formulated in utility space, in attribute space and in cognitive space. Empirical evidence with regard to the predictive performance of these models vis-a-vis the performance of compensatory choice model varies. Some studies have suggested that noncompensatory decision rules outperform compensatory models, but there is also evidence on the contrary.

Models that consider the formation of choice sets have received more interest. Although this point of view seems to have received limited support, the distinction between choice set formation and subsequent choice seems arbitrary, artificial and therefore not very appealing. While it would be imaginable that as part of a process model of high involvement decision-making under uncertainty individuals would sequentially reduce the number of alternatives considered as they collect and process additional information, it seems plausible that preference structures both drive the alternatives considered and the actual choice. Hence, the very few models attempting to address both processes in parallel warrant further study and expansion.

Recently, travel behaviour research has started to formulate reference-dependent models, in which the references are either endogenously (choice set composition) or exogenously defined. Regret-based and relative utility models are examples of that kind. Current regret models have some issues of definition and specification that need to be addressed. Moreover, these models can be expanded in the sense that many more alternative to the random utility models can be formulated. In addition, work on mixtures of decision rules, not only to represent heterogeneity in choice behaviour among individuals but also to capture different processes that may operate in a single decision-making process, should have high priority in the research agenda.

Finally, virtually all applications of models of bounded rationality under certainty (and uncertainty for that matter) have been restricted to static individual choice problems. Attempts to expand the scope of these models to problems of joint decisions, group (e.g. social networks) decisions and dynamic choice problems should be applauded.

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