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Utility Maximization, The Shapes of the Indifference Curve on the Characteristic Space and its Estimation: A Theoretical Approach  

Kim, Jong-Seok (한국해양대학교 국제무역경제학부)
Publication Information
Journal of Korean Society of Transportation / v.27, no.2, 2009 , pp. 157-168 More about this Journal
Abstract
The random utility theory and the multinomial logit model (including a more recent variant--the mixed multinomial logit) derived from it have constituted a back bone for theoretical and empirical analyses of various travel demand features including mode choice. In their empirical applications, however, it is customary to specify random utilities which are linear in modal attributes such as time and cost, and in socio-economic variables. The linearity helps easy derivation of important information such as value of travel time savings by calculating marginal rate of substitution between time and cost. In this paper the author focuses on the very linearity of the random utilities. Taking into account the fact that the mode chooser is also labour supplier, commodity consumer as well as leisure-seeker, the author sets up a maximization model of the traveller, which encompasses various economic activities of the traveller. The author derive from the model the indifference curve defined on the space of modal attributes, time and cost and investigate under what conditions the random utility of the traveller becomes linear. It turns out that there exist the conditions under which the random utility is really linear in modal attributes, but the property does not hold when the traveller has a corner solution on the space of modal attributes, or when the primary utility function of the traveller is directly affected by labour provided and/or the travel time itself. As a corollary of the analysis, a random utility is suggested, approximated up to the second order of the variables involved for empirical studies of the field.
Keywords
Random Utility Theory; Modal Attributes; Mode Choice Behavior; Linear Utility Function; MNL: Multinomial Logit Model; VTTS;
Citations & Related Records
Times Cited By KSCI : 3  (Citation Analysis)
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