Prospect Theory and Choice Behaviour Strategies: Review and Synthesis of Concepts from Social and Transport sciences
Utility Theory is commonly considered as the most useful descriptive theory of human choice behaviour. Alternative concepts are only incidentally considered. This paper reviews alternative assumptions and empirical findings about human choice behaviour. To facilitate comparison and synthesis the review starts with the proposal of a generic framework of choice behaviour. The micro-economic assumptions of Utility Theory and Prospect Theory are then mapped onto this framework. These are compared with each other and other assumptions against the background of theoretical and empirical findings from behavioural economics, several other social disciplines and transport sciences. An extension of Prospect Theory with assumptions about the valuation of attributes and the employment of different decision rules yields a functional concept of choice behaviour that is able to describe most of the reviewed empirical findings to a larger extent than Utility Theory.