Optimal transit fare in a bimodal network under demand uncertainty and bounded rationality

This paper investigates the optimal transit fare in a simple bimodal transportation system that comprises public transport and private car. We consider two new factors: demand uncertainty and bounded rationality. With demand uncertainty, travelers are assumed to consider both the mean travel cost and travel cost variability in their mode choice decision. Under bounded rationality, travelers do not necessarily choose the travel mode of which perceived travel cost is absolutely lower than the one of the other mode. To determine the optimal transit fare, a bi-level programming is proposed. The upper-level objective function is to minimize the mean of total travel cost, whereas the lower-level programming adopts the logit-based model to describe users' mode choice behaviors. Then a heuristic algorithm based on a sensitivity analysis approach is designed to solve the bi-level programming. Numerical examples are presented to illustrate the effect of demand uncertainty and bounded rationality on the modal share, optimal transit fare and system performance. Copyright (c) 2013 John Wiley & Sons, Ltd.