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The influence of information availability on the choice of destination

Author

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  • François Combes

    () (LVMT - Laboratoire Ville, Mobilité, Transport - IFSTTAR - Institut Français des Sciences et Technologies des Transports, de l'Aménagement et des Réseaux - UPEM - Université Paris-Est Marne-la-Vallée - ENPC - École des Ponts ParisTech)

  • André De Palma

    (ENS Cachan - École normale supérieure - Cachan, Department of Economics, Ecole Polytechnique - X - École polytechnique - CNRS - Centre National de la Recherche Scientifique)

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.

Suggested Citation

  • François Combes & André De Palma, 2010. "The influence of information availability on the choice of destination," Working Papers hal-00517718, HAL.
  • Handle: RePEc:hal:wpaper:hal-00517718
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00517718
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    Keywords

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

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