Chapter 9: Incorporating Bounded Rationality in a Model of Endogenous Dynamics of Activity-Travel Behaviour

This chapter discusses the formulation of an agent-based model to simulate day-to-day dynamics in activity-travel patterns, based on short and long-term adaptations to exogenous and exogenous changes.

The model is based on theoretical considerations of bounded rationality. Agents are able to explore the area, adapt their aspirations and develop habitual behaviour. If they experience dissatisfaction, stress emerges and this may lead to short or long-term adaptations of an agent’s activity-travel patterns. Both cognitive and affective responses are taken into account, when agents evaluate available options. Moreover, memory-activation and forgetting processes play a significant role in the development of habitual behaviour.

Results of numerical simulations show the effect of memory-activation and emotion-related parameters on habit formation, on the decision-making process and on overall model behaviour. Effects of specific aspects of bounded rationality on the evolution of dynamics in the activity-travel patterns of an individual are illustrated. Effects seem realistic, behaviourally rich and, therefore, more sensitive to a larger spectrum of policies.

The model is unique in its kind. It is one of the first attempts to formulate a dynamic model of activity-travel behaviour, based on principle of bounded rationality, which includes both cognitive and affective mechanism of adaptation.