Degree Name

Doctor of Philosophy


School of Mechanical, Materials and Mechatronics Engineering


This thesis explains the effects of traveller choice attributes in transport mode services to understand an inferred relationship between traveller and Transport for NSW (TfNSW), Australia in the context of Principal-Agent Theory (PAT). As agency problem is found in transport mode services of TfNSW, this thesis also suggests an approach to reduce this problem using traveller mode choice probability analysis.

When travellers entrust their desire for a mode of transport that is customer-focused (i.e. safe, reliable, comfortable and low cost) to TfNSW, this creates a metaphorical contract between travellers and TfNSW, known as an agency contract. This contract is often characterised by agency uncertainty (problem) because both the traveller and the TfNSW are most likely to act in their own self-interest. It can be assumed that where there is a high use of public transport, the TfNSW is performing the entrusted tasks as per travellers’ expectation, which indicates an improvement in agency uncertainty. On the other hand, where there is a high use of private transport (car), it is likely that the TfNSW is biased in other stakeholders’ interest more rather than travellers’ interest, and the agency problem remains unresolved.

The thesis focuses on latent variables (LV) and traditional objective attributes (TOA) together during the mode choice process (private and public) within the principal-agent relationship. A method, by which the utility of the principal (traveller) can be maximised and evaluated, is known as discrete choice experiment that has been employed to explore the relationship and an approach to reduce the agency problem in the relationship. A traditional random parameter logit (TRPL) model is compared with a hybrid RPL (HRPL) model in this research. For the later model, a two-step approach (also known as sequential approach) is implemented to incorporate LVs in choice models. Step 1 is the estimation of a MIMIC (multiple indicators and multiple causes) model; a type of regression model with a latent dependent variable(s). Step 2 is the estimation of a choice model with random parameters; information from the first step is incorporated in the second step.

Exploring the agency relationship within transport mode services produces hypotheses and related propositions that are reported and tested in this study. From the results, it is shown that the probability of car use is significantly higher than public transport, which indicates that an agency problem exists in transport mode services. Similar results are found for car owner and non-car owner samples. The thesis also analyses and compares the results of applying RPL models to a real urban case study using two datasets: 2008/09 and 2010/11 household travel survey (HTS) of Sydney Statistical Division (SSD), and also evaluates the predicted changes of mode choice probabilities based on hypothetical scenarios that have been considered as a mechanism of minimising agency problem in the mode services. The results also show that the HRPL model is superior to TRPL models that ignore the effect of LVs on traveller choice. The minimal changes in the parameter coefficients between the two examined periods for each model suggest that the changes in traveller choice behaviour are gradual. Three hypothetical scenarios were simulated to forecast the changes that would be relevant to transport policy responses and provide a guideline to reduce the agency problem. It is recommended that by analysing traveller preferences according to a hierarchy of importance it would indicate those attributes of the agency in transport mode services that would help to resolve the agency problem and assist in the formulation of a policy response. In this regard, the thesis found safety and reliability among LVs most important followed by travel time, travel cost, waiting time, car ownership and having children among TOAs.

Thus, the contribution of this research is four-fold: firstly, the application of agency theory’s utility and implications in traveller choice behaviour, which is rare in transportation management field; secondly, the demonstration of scale to which attributes influence traveller mode choice to shape the agency relationship within transport mode services with a comparison between traditional and hybrid discrete choice models; thirdly, the inclusion of an extended number of traveller choice attributes (LVs and TOAs) in choice model that assesses a connection between traveller and TfNSW in the context of PAT; and finally, the improvement of agency relationship in transport mode services by integrating the traveller choice attributes into the choice models within principal-agent framework.