# Bounded Rationality in Dynamic Traffic Assignment

*WY Szeto, Yi Wang and Ke Han*

**Abstract**

*Purpose –* This chapter explores a descriptive theory of multidimensional travel behaviour, estimation of quantitative models and demonstration in an agent-based microsimulation.

*Theory –* A descriptive theory on multidimensional travel behaviour is conceptualised. It theorizes multidimensional knowledge updating, search start/stopping criteria and search/decision heuristics. These components are formulated or empirically modelled and integrated in a unified and coherent approach.

*Findings –* The theory is supported by empirical observations and the derived quantitative models are tested by an agent-based simulation on a demonstration network.

*Originality and value –* Based on artificially intelligent agents, learning and search theory and bounded rationality, this chapter makes an effort to embed a sound theoretical foundation for the computational process approach and agent-based micro-simulations. A pertinent new theory is proposed with experimental observations and estimations to demonstrate agents with systematic deviations from the rationality paradigm. Procedural and multidimensional decision-making are modelled. The numerical experiment highlights the capabilities of the proposed theory in estimating rich behavioural dynamics.

*Keywords:* Dynamic traffic assignment; Wardop's principle; tolerance-based dynamic user optimal principle; nonlinear complementarity problem; departure time choice assignment

## Introduction

The aim of this chapter is to introduce boundedly rational dynamic user equilibrium traffic assignment to the beginners of this research area. The chapter has been prepared mainly based on the papers written by Szeto and Lo (2004, 2006), Szeto and Wong (2011) and Han, Szeto, and Friesz (2014). It firstly depicts dynamic traffic assignment (DTA) and its basic components, presents the literature of traffic assignment with bounded rationality, provides a problem formulation and discusses solution methods. The solution existence and uniqueness of the problem are also discussed. Some concluding remarks are finally given. The chapter can be served as a toolkit for the beginners.