Diverging effects of subjective prospect values of uncertain time and money

Journal article, 2021

Studies from behavioral economics show that the subjective prospect value of money has diminishing sensitivity to losses/gains, represented by an S-shape, and this has been applied in representing the subjective prospect value of time in many transportation studies such as travel behavior modeling and network equilibrium. In this study, we demonstrate that the prospect value of time has an increasing sensitivity to losses/gains and can be represented by an Ϩ-shape, which contrasts that of money. We further explain the rationality of this surprising finding based on psychological and behavioral theories and discuss extensive practical implications. The correlations between sensitivities to gains and losses in terms of magnitude are revealed as well to shed light on potential underlying correlated behavioral principles. Substantial loss-aversion features are observed in the empirical analysis, supporting endowment effects. Implications of the findings on decision-making and other areas that utilize time as a key indicator have been discussed. The findings may revolutionize many research areas that utilize time as a key indicator such as transportation engineering.