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The Benefits of Forced Experimentation: Striking Evidence from the London Underground Network

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  • Shaun Larcom
  • Ferdinand Rauch
  • Tim Willems

Abstract

We estimate that a significant fraction of commuters on the London underground do not travel their optimal route. Consequently, a tube strike (which forced many commuters to experiment with new routes) taught commuters about the existence of superior journeys, bringing about lasting changes in behaviour. This effect is stronger for commuters who live in areas where the tube map is more distorted, thereby pointing towards the importance of informational imperfections. We argue that the information produced by the strike improved network-efficiency. Search costs are unlikely to explain the suboptimal behaviour. Instead, individuals seem to under-experiment in normal times, as a result of which constraints can be welfare-improving.

Suggested Citation

  • Shaun Larcom & Ferdinand Rauch & Tim Willems, 2015. "The Benefits of Forced Experimentation: Striking Evidence from the London Underground Network," CEP Discussion Papers dp1372, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1372
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    More about this item

    Keywords

    Experimentation; learning; optimization; rationality; search;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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