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The influence of information availability on the choice of destination

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Author Info

  • F. Combes

    (Université Paris Est - LVMT)

  • André De Palma

    (ENS Cachan - Ecole Normale Supérieure de Cachan - École normale supérieure de Cachan - ENS Cachan, Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)

Abstract

We 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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Bibliographic Info

Paper provided by HAL in its series Working Papers with number hal-00517718.

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Date of creation: 15 Sep 2010
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Handle: RePEc:hal:wpaper:hal-00517718

Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00517718/en/
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Related research

Keywords: travel demand; search; logit; information regimes; value of information; differentiation;

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