Quotation Koster, Paul, Peer, Stefanie, Dekker, Thijs. 2015. Memory, expectation formation and scheduling choices. Economics of Transportation 4 (4): S. 256-265.


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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.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Economics of Transportation
Language English
Title Memory, expectation formation and scheduling choices
Volume 4
Number 4
Year 2015
Page from 256
Page to 265
Reviewed? Y
URL http://www.sciencedirect.com/science/article/pii/S221201221500043X

Associations

People
Peer, Stefanie (Details)
External
Dekker, Thijs
Koster, Paul
Organization
Institute for Multi-Level Governance and Development IN (Details)
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