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Bounded Rational Choice Behaviour Applications In Transport: An Exploration of Cognitive Limitations and Behavioural Biases in Transportation Decision-Making

Grant Hayes

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Bounded rationality is a concept in behavioural economics that describes how individuals make decisions under conditions of limited information, cognitive capacity, and time. It is a departure from the classical economic model of rational choice, which assumes that individuals are perfectly rational and make decisions that maximize their utility. In reality, however, individuals are often boundedly rational, meaning that they make decisions that are good enough, rather than optimal.

Bounded rationality has important implications for transport planning and policy. By understanding how cognitive limitations and behavioural biases influence transportation decision-making, we can develop more effective interventions to improve transport outcomes.

Bounded Rational Choice Behaviour: Applications in Transport (0)

by Esperanza Fuentealba

4.4 out of 5

Language	:	English
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Cognitive Limitations

One of the key cognitive limitations that affects transportation decision-making is satisficing. Satisficing is the tendency to make decisions that are good enough, rather than optimal. This is often due to the fact that individuals do not have the time or cognitive capacity to gather all the information necessary to make the perfect decision.

For example, when choosing a mode of transport, individuals may not have the time to compare all the available options in detail. Instead, they may simply choose the first option that meets their basic requirements. This can lead to suboptimal decisions, such as choosing a mode of transport that is more expensive or less convenient than other available options.

Another cognitive limitation that affects transportation decision-making is framing. Framing refers to the way in which information is presented to individuals. The way in which information is framed can influence the decisions that individuals make.

For example, a study by Kahneman and Tversky (1981) found that individuals were more likely to choose a risky option when it was framed as a potential gain, rather than as a potential loss. This suggests that the way in which transport information is presented to individuals can influence their mode of transport choice.

Behavioural Biases

In addition to cognitive limitations, behavioural biases can also affect transportation decision-making. Behavioural biases are systematic errors in thinking that can lead individuals to make poor decisions.

One of the most common behavioural biases that affects transportation decision-making is the status quo bias. The status quo bias is the tendency to prefer the current state of affairs, even if there are better options available. This can lead to individuals making decisions that are not in their best interests, such as continuing to drive a car, even though there are more sustainable and efficient modes of transport available.

Another common behavioural bias that affects transportation decision-making is the endowment effect. The endowment effect is the tendency to place a higher value on things that we already own. This can lead to individuals making decisions that are not economically rational, such as selling a car for less than its market value.

Applications in Transport

Bounded rationality has a number of applications in transport planning and policy. By understanding how cognitive limitations and behavioural biases influence transportation decision-making, we can develop more effective interventions to improve transport outcomes.

One way to do this is to provide individuals with better information. By providing individuals with more information about the different transport options available to them, we can help them to make more informed decisions. This can lead to improved transport outcomes, such as reduced congestion and increased use of sustainable modes of transport.

Another way to improve transport outcomes is to design interventions that are mindful of cognitive limitations and behavioural biases. For example, we can design interventions that make it easier for individuals to make sustainable transport choices.

For example, we can provide financial incentives for individuals to use sustainable modes of transport, such as public transport or cycling. We can also design public transport systems that are more convenient and user-friendly.

Bounded rationality is a key concept in behavioural economics that has important implications for transport planning and policy. By understanding how cognitive limitations and behavioural biases influence transportation decision-making, we can develop more effective interventions to improve transport outcomes.

Some specific examples of how bounded rationality can be applied in transport include:

* Using simplified information displays to help people understand complex transport options * Providing default options that encourage people to make sustainable choices * Making it easier for people to switch between different modes of transport * Designing transport systems that are more resilient to disruptions

By taking account of bounded rationality, we can design transport systems that are more user-friendly, efficient, and sustainable.

Bounded Rational Choice Behaviour: Applications in Transport (0)

by Esperanza Fuentealba

4.4 out of 5