Travel Mode Choices in a Greening Market: The Impact of Electric Vehicles and Prior Investments

Abstract

Through a choice experiment conducted among 995 Swiss respondents, we studied the linkages between prior investment decisions and the choice of travel mode. Our experimental design and empirical framework aimed to identify the impact of electric vehicles (EVs) and to test for two behavioral deviations from rationally optimal usage. Prior investment in a car or public transport pass could be used ex ante as a commitment device for overcoming self-control issues, or could affect mode choices ex post through the regret effect of sunk costs. We found no evidence to support the sunk cost hypothesis, but our findings provided partial evidence in favor of commitment mechanisms. A prior investment decision decreased the consumer’s responsiveness to variation of travel time. However, such commitments did not seem to influence responses to changes in marginal travel costs. Further, we found that EV adoption in the experiment did not result in a significant step-change in hypothetical usage patterns above rational marginal cost reactions. Our results thus reinforced the importance of financial incentives in policies aimed at a behavioral change in travel mode choices.

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