Risk aversion, the value of information and traffic equilibrium

André de Palma (), Robin Lindsey and Nathalie Picard ()
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Robin Lindsey: University of Alberta - University of Alberta

Working Papers from HAL

Abstract: Information about traffic conditions has traditionally been conveyed to drivers by radio and variable message signs, and more recently via the Internet and Advanced Traveler Information Systems. This has spurred research on how travelers respond to information, how much they are willing to pay for it and how much they are likely to benefit from it collectively. In this paper we analyze the decisions of drivers whether to acquire information and which route to take on a simple congested road network. Drivers vary in their degree of risk aversion with respect to travel time. Four information regimes are considered: No information, Free information which is publicly available at no cost, Costly information which is publicly available for a fee, and Private information which is available free to a single individual. Private information is shown to be individually more valuable than either Free or Costly information, while the benefits from Free and Costly information cannot be ranked in general. Free or Costly information can decrease the expected utility of drivers who are very risk-averse, and with sufficient risk aversion in the population the aggregate compensating variation for information can be negative.

Keywords: Transportation; route choice; information provision; expected utility; congestion (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta, nep-geo, nep-ict, nep-upt and nep-ure
Date: 2008-12
Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00349492/en/
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