Risk preference and adoption of autonomous vehicles

Abstract

Despite an increasingly large body of research that focuses on the potential demand for autonomous vehicles (AVs), risk preference is an understudied factor. Given that AV technology and how it will interact with the evolving mobility system are highly risky, this lack of research on risk preference is a critical gap in current understanding. By using a stated preference survey of 1142 individuals from Singapore, this study achieves three objectives. First, it develops one measure of psychometric risk preference and operationalizes prospect theory to create two economic risk preference parameters. Second, it examines how these psychometric and economic risk preferences are associated with socioeconomic variables. Third, it analyzes how risk preference influences the mode choice of AVs. The study finds that risk preference parameters are significantly associated with socioeconomic variables: the elderly, poor, females, and unemployed Singaporeans appear more risk-averse and tend to overestimate small probabilities of losses. Furthermore, all three risk preference parameters contribute to the prediction of AV adoption. These modeling results have policy implications at both the aggregate and disaggregate levels. At the aggregate level, people misperceive probabilities, are overall risk-averse, and hence under-consume AVs relative to the social optimum. At the disaggregate level, the elderly, poor, female, and unemployed are more risk-averse and thus are less likely to adopt AVs. These results suggest that it might be valuable for governments to implement policies to encourage technology adoption, particularly for disadvantaged social groups, although caution remains due to uncertainty in the long-term effects of AVs. Individualized risk preference parameters could also inform how to design regulations, safety standards, and liability allocations of AVs since many regulations are essentially mechanisms for risk allocation. One limitation of the paper is that risk preference is measured and modeled only as individual-specific but not alternative-specific variables. Future studies should examine the relationship between the multiple components of risk preference and the multiple risky aspects of AVs.