Consumer preferences for alternative fuel vehicles: Comparing a utility maximization and a regret minimization model

This paper presents a utility-based and a regret-based model of consumer preferences for alternative fuel vehicles, based on a large-scale stated choice-experiment held among company car leasers in The Netherlands. Estimation and application of random utility maximization and random regret minimization discrete choice models shows that while the two models achieve almost identical fit with the data and differ only marginally in terms of predictive ability, they generate rather different choice probability-simulations and policy implications. The most eye-catching difference between the two models is that the random regret minimization model accommodates a compromise-effect, as it assigns relatively high choice probabilities to alternative fuel vehicles that perform reasonably well on each dimension instead of having a strong performance on some dimensions and a poor performance on others.