Exploring the Impact of Commuter’s Residential Location Choice on the Design of a Rail Transit Line Based on Prospect Theory

This paper explores the impact of prospect theory based commuter’s residential location choice on the design problem of a rail transit line located in a monocentric city. A closed-form social welfare maximization model is proposed, with special consideration given to prospect theory based commuter’s residential location choice over years. Commuters are assumed to make residential location choice by a trade-off between daily housing rent and generalized travel cost to minimize their prospect values. The solutions properties of the proposed model are explored and compared analytically. It is found that overestimation exists for the optimal solutions of rail line length, headway, and fare based on traditional utility theory, compared with the optimal solutions of the proposed prospect theory based model. A numerical example is given to illustrate the properties of the proposed model