Memory, expectation formation and scheduling choices
Paul Koster (),
Stefanie Peer () and
Thijs Dekker ()
Economics of Transportation, 2015, vol. 4, issue 4, 256-265
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.
Keywords: Memory; Transience; Expectation formation; Retrieval accuracy; Scheduling; Value of reliability (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Memory, Expectation Formation and Scheduling Choices (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:ecotra:v:4:y:2015:i:4:p:256-265
Access Statistics for this article
Economics of Transportation is currently edited by Mogens Fosgerau and Erik Verhoef
More articles in Economics of Transportation from Elsevier
Bibliographic data for series maintained by Haili He ().