Models of travel demand with endogenous preference change and heterogeneous agents

In the literatures of regional science, urban economics, and urban development planning, a working assumption is that individuals respond to incentives and regulations, given their preferences. Models for planning and policy analyses are used to consider what might occur if the incentives or regulations were different. In these models, however, preferences are usually assumed to be given and stable, and agents are usually assumed to be homogeneous. This paper focuses on the implications of making preferences in models of policy implementation endogenously determined and time varying heterogeneous agents. We consider first the recent literature on intertemporal choice and preference change, which cuts across many disciplines, and more briefly the literature on norm-regarding behavior. We then elaborate a simple model of transportation demand—from a static to a dynamic orientation, from fixed and exogenously given preferences of strictly self-regarding agents to endogenously determined and policy-induced preferences of heterogeneous agents—and illustrate its characteristics with simple numerical examples.