Risk aversion, the value of information and traffic equilibrium
AbstractInformation about traffic conditions has traditionally been conveyed to drivers by radio and variable message signs, and more recently via the Internet and Advanced Traveler Information Systems. This has spurred research on how travelers respond to information, how much they are willing to pay for it and how much they are likely to benefit from it collectively. In this paper we analyze the decisions of drivers whether to acquire information and which route to take on a simple congested road network. Drivers vary in their degree of risk aversion with respect to travel time. Four information regimes are considered: No information, Free information which is publicly available at no cost, Costly information which is publicly available for a fee, and Private information which is available free to a single individual. Private information is shown to be individually more valuable than either Free or Costly information, while the benefits from Free and Costly information cannot be ranked in general. Free or Costly information can decrease the expected utility of drivers who are very risk-averse, and with sufficient risk aversion in the population the aggregate compensating variation for information can be negative.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by HAL in its series Working Papers with number hal-00349492.
Date of creation: Dec 2008
Date of revision:
Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00349492/en/
Contact details of provider:
Web page: http://hal.archives-ouvertes.fr/
Transportation; route choice; information provision; expected utility; congestion;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-03-22 (All new papers)
- NEP-CTA-2009-03-22 (Contract Theory & Applications)
- NEP-GEO-2009-03-22 (Economic Geography)
- NEP-ICT-2009-03-22 (Information & Communication Technologies)
- NEP-UPT-2009-03-22 (Utility Models & Prospect Theory)
- NEP-URE-2009-03-22 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kobayashi, Kiyoshi, 1994. "Information, Rational Expectations and Network Equilibria--An Analytical Perspective for Route Guidance Systems," The Annals of Regional Science, Springer, vol. 28(4), pages 369-93, December.
- Rong Zhang & Erik T. Verhoef, 2004.
"A Monopolistic Market for Advanced Traveller Information Systems and Road Use Efficiency,"
Tinbergen Institute Discussion Papers
04-014/3, Tinbergen Institute.
- Zhang, Rong & Verhoef, Erik T., 2006. "A monopolistic market for advanced traveller information systems and road use efficiency," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(5), pages 424-443, June.
- Simon P. Anderson & André de Palma, 2009.
RAND Journal of Economics,
RAND Corporation, vol. 40(4), pages 688-709.
- Robin Lindsey & Andre de Palma, 1998. "Information and Usage of Congestible Facilities Under Different Pricing Regimes," Canadian Journal of Economics, Canadian Economics Association, vol. 31(3), pages 666-692, August.
- Emmerink, Richard H M, et al, 1998. "Information Effects in Transport with Stochastic Capacity and Uncertainty Costs," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 89-110, February.
- Richard Arnott & Andre De Palma & Robin Lindsey, 1993. "Information And Usage Of Free-Access Congestible Facilities," Boston College Working Papers in Economics 238, Boston College Department of Economics.
- de Palma, André & Picard, Nathalie, 2005. "Route choice decision under travel time uncertainty," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(4), pages 295-324, May.
- Andre Palma & Moshe Ben-Akiva & David Brownstone & Charles Holt & Thierry Magnac & Daniel McFadden & Peter Moffatt & Nathalie Picard & Kenneth Train & Peter Wakker & Joan Walker, 2008.
"Risk, uncertainty and discrete choice models,"
Springer, vol. 19(3), pages 269-285, December.
- André de Palma & Moshe Ben-Akiva & David Brownstone & Charles Holt & Thierry Magnac & Daniel McFadden & Peter Moffatt & Nathalie Picard & Kenneth Train & Peter Wakker & Joan Walker, 2008. "Risk, Uncertainty and Discrete Choice Models," THEMA Working Papers 2008-02, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Lam, Terence C. & Small, Kenneth A., 0.
"The value of time and reliability: measurement from a value pricing experiment,"
Transportation Research Part E: Logistics and Transportation Review,
Elsevier, vol. 37(2-3), pages 231-251, April.
- Lam, Terence C. & Small, Kenneth A., 2003. "The Value of Time and Reliability: Measurement from a Value Pricing Experiment," University of California Transportation Center, Working Papers qt47s4z7z5, University of California Transportation Center.
- Lam, T.C. & Small, K.A., 2000. "The Value of Time and Reliability: Measurement from a Value Pricing Experiment," Papers 00-02, California Irvine - School of Social Sciences.
- Richard H. M. Emmerink & Erik T. Verhoef & Peter Nijkamp & Piet Rietveld, 1996. "Endogenising demand for information in road transport," The Annals of Regional Science, Springer, vol. 30(2), pages 201-222.
- Small, Kenneth A. & Winston, Clifford & Yan, Jia, 2005.
"Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability,"
- Kenneth A. Small & Clifford Winston & Jia Yan, 2005. "Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability," Econometrica, Econometric Society, vol. 73(4), pages 1367-1382, 07.
- Brownstone, David & Small, Kenneth A., 2003.
"Valuing Time and Reliability: Assessing the Evidence from Road Pricing Demonstrations,"
University of California Transportation Center, Working Papers
qt95z0p35k, University of California Transportation Center.
- Brownstone, David & Small, Kenneth A., 2005. "Valuing time and reliability: assessing the evidence from road pricing demonstrations," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(4), pages 279-293, May.
- Lo, Hong K. & Szeto, W. Y., 2002. "A methodology for sustainable traveler information services," Transportation Research Part B: Methodological, Elsevier, vol. 36(2), pages 113-130, February.
- Hirshleifer, Jack, 1971. "The Private and Social Value of Information and the Reward to Inventive Activity," American Economic Review, American Economic Association, vol. 61(4), pages 561-74, September.
- Piet Rietveld, 2010. "The Economics of Information in Transport," Tinbergen Institute Discussion Papers 10-110/3, Tinbergen Institute.
- repec:dgr:uvatin:2010110 is not listed on IDEAS
- Fosgerau, Mogens & Lindsey, Robin, 2013.
"Trip-timing decisions with traffic incidents,"
48708, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD).
If references are entirely missing, you can add them using this form.