The influence of information availability on the choice of destination
AbstractWe set a framework where an individual has to choose one among a set of spatially distributed activities. The individual knows the price of each activity, as well as the distance to reach it. She has either full or zero information about each activity's quality. Qualities are modeled by i.i.d. random variables. Under the full information regime, the individual knows the realizations of the qualities; while under the no information regime, she only knows the distribution of the qualities. In that case, she can decide either ex ante, or en route, how many activities to patronize. We analyze the impact of information availability on the choice process, on the distance the individual covers, and on the individual's expected utility. In this framework, more information yields longer distance traveled, but also higher utility. We compute the individual's willingness to pay for information. Finally, we show that providing information may decrease the individual's benefit when congestion arises.
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Date of creation: 15 Sep 2010
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travel demand; search; logit; information regimes; value of information; differentiation;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-25 (All new papers)
- NEP-GEO-2010-09-25 (Economic Geography)
- NEP-URE-2010-09-25 (Urban & Real Estate Economics)
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