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Equilibria and Information Provision in Risky Networks with Risk-Averse Drivers

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  • André de Palma

    (THEMA, Université de Cergy-Pontoise, 33 Boulevard du Port, 95011 Cergy-Pontoise cedex, France, and École Nationale des Ponts et Chaussées, 28 rue des Saint-Pères, 75343 Paris cedex 07, France)

  • Nathalie Picard

    (THEMA, Université de Cergy-Pontoise, 33 Boulevard du Port, 95011 Cergy-Pontoise cedex, France, and Institut National des Études Démographiques, 133 Boulevard Davout, 75980 Paris cedex 20, France)

Abstract

We study the impact of information on risk-averse drivers who maximize their expected utility (rather than minimizing expected travel time). For two routes in parallel with risky travel time, we show that equilibrium travel times depend on the distribution of risk aversion as well as on provision of information. Besides the mean variance model used so far in transportation, we consider three other standard utility functions. Interestingly, we find that optimal route choice may depend on global factors such as the length of the journey. Finally, we study the benefit of information according to the level of risk aversion.

Suggested Citation

  • André de Palma & Nathalie Picard, 2006. "Equilibria and Information Provision in Risky Networks with Risk-Averse Drivers," Transportation Science, INFORMS, vol. 40(4), pages 393-408, November.
    • Handle: RePEc:inm:ortrsc:v:40:y:2006:i:4:p:393-408
    DOI: 10.1287/trsc.1060.0152
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    References listed on IDEAS

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    1. 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.
    2. 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.
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    8. André de Palma & Nathalie Picard, 2006. "Route Choice Behaviour with Risk-Averse Users," Chapters, in: Aura Reggiani & Peter Nijkamp (ed.), Spatial Dynamics, Networks and Modelling, chapter 7, Edward Elgar Publishing.
    9. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1996. "Information and Usage of Free-Access Congestible Facilities with Stochastic Capacity and Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(1), pages 181-203, February.
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    Cited by:

    1. Gubins, Sergejs & Verhoef, Erik T. & de Graaff, Thomas, 2012. "Welfare effects of road pricing and traffic information under alternative ownership regimes," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(8), pages 1304-1317.
    2. Casper G. Chorus & Harry J.P. Timmermans, 2011. "Personal Intelligent Travel Assistants," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 25, Edward Elgar Publishing.
    3. Xiao, Yu & Coulombel, Nicolas & Palma, André de, 2017. "The valuation of travel time reliability: does congestion matter?," Transportation Research Part B: Methodological, Elsevier, vol. 97(C), pages 113-141.
    4. Matthieu De Lapparent & Moshe Ben-Akiva, 2014. "Risk Aversion in Travel Mode Choice with Rank-Dependent Utility," Mathematical Population Studies, Taylor & Francis Journals, vol. 21(4), pages 189-204, December.
    5. Caspar G. Chorus & Benedict G. C. Dellaert, 2012. "Travel Choice Inertia: The Joint Role of Risk Aversion and Learning," Journal of Transport Economics and Policy, University of Bath, vol. 46(1), pages 139-155, January.
    6. Patrick Maillé & Nicolás E. Stier-Moses, 2009. "Eliciting Coordination with Rebates," Transportation Science, INFORMS, vol. 43(4), pages 473-492, November.
    7. repec:dgr:uvatin:20100091 is not listed on IDEAS
    8. André Palma & Nathalie Picard & Laetitia Andrieu, 2012. "Risk in Transport Investments," Networks and Spatial Economics, Springer, vol. 12(2), pages 187-204, June.
    9. Caspar G. Chorus, 2014. "Acquisition of Ex-Post Travel Information: A Matter of Balancing Regrets," Transportation Science, INFORMS, vol. 48(2), pages 243-255, May.
    10. F. Combes & A. De Palma, 2016. "The Impact of Information Availability on Destination Choice," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(3), pages 678-687, September.
    11. André De Palma & Nathalie Picard & Matthieu De Lapparent, 2014. "Risky Time Prospects and Travel Demand," Mathematical Population Studies, Taylor & Francis Journals, vol. 21(4), pages 185-188, December.
    12. Zhaoqi Zang & Xiangdong Xu & Kai Qu & Ruiya Chen & Anthony Chen, 2022. "Travel time reliability in transportation networks: A review of methodological developments," Papers 2206.12696, arXiv.org, revised Jul 2022.
    13. Engelson, Leonid & Fosgerau, Mogens, 2020. "Scheduling preferences and the value of travel time information," Transportation Research Part B: Methodological, Elsevier, vol. 134(C), pages 256-265.
    14. Han, Xiao & Yu, Yun & Gao, Zi-You & Zhang, H. Michael, 2021. "The value of pre-trip information on departure time and route choice in the morning commute under stochastic traffic conditions," Transportation Research Part B: Methodological, Elsevier, vol. 152(C), pages 205-226.
    15. Zhaoqi Zang & Richard Batley & Xiangdong Xu & David Z. W. Wang, 2022. "On the value of distribution tail in the valuation of travel time variability," Papers 2207.06293, arXiv.org, revised Dec 2023.
    16. François P. A. Combes & André de Palma, 2010. "The influence of information availability on the choice of destination," Working Papers hal-00517718, HAL.
    17. Hamed Alibabai & Hani S. Mahmassani, 2016. "Foxes and sheep: effect of predictive logic in day-to-day dynamics of route choice behavior," EURO Journal on Transportation and Logistics, Springer;EURO - The Association of European Operational Research Societies, vol. 5(1), pages 53-67, March.
    18. André de Palma & Robin Lindsey & Nathalie Picard, 2012. "Risk Aversion, the Value of Information, and Traffic Equilibrium," Transportation Science, INFORMS, vol. 46(1), pages 1-26, February.
    19. Yu, Xiaojuan & van den Berg, Vincent A.C. & Li, Zhi-Chun, 2023. "Congestion pricing and information provision under uncertainty: Responsive versus habitual pricing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 175(C).

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