10110.pdf - TI 2010-110/3 Tinbergen Institute Discussion...

TI 2010-110/3
Tinbergen Institute Discussion Paper
The Economics of Information in
Transport
Piet Rietveld
VU University Amsterdam, and Tinbergen Institute.

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The Economics of Information in Transport
Piet Rietveld
Introduction
Economic analyses of travel behavior are usually based on the assumption that travelers
are well-informed about the options they have. In reality the situation may be rather
different. Travelers may not know the complete set of alternatives available to them.
Another possibility is that travelers are not well-informed about particular features of
travel alternatives. Much of the literature focuses on uncertainty on travel times (Chorus,
2007). One possibility is that travelers have biased information on travel times of some
alternatives. Another possibility is that the realizations of travel times with transport
alternatives are variable due to factors such as incidents or variations in weather
conditions. In that case travelers do not know beforehand what will be the actual travel
times of the choices they are considering.
The various cases of incomplete information can be shown to have potentially important
implications for the distinct domains of travel behavior such as whether or not to make a
trip, modal choice, the timing of a trip or the choice of the route. Lack of information
about choice alternatives naturally affects choice probabilities as also does biased
information about travel times. An example of a systematic gap between perceived and
actual travel times is provided by Exel and Rietveld (2009a) who find for a large sample of
car travelers that perceptions of public transport travel time exceed objective values by on
average 40-50%. Analysis of modal choice on the basis of actual behavior (revealed
preference) under the assumption that perceived travel times of non-chosen alternatives
are equal to objective values would then lead to biased estimates of the underlying utility
function.
Variability in the availability and performance of travel alternatives also has important
implications for travel behavior. People may dislike uncertainty and this would then affect
their choices even when they are well informed on the mean values of the travel
alternatives.
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This leads to issues such as how information provision affects traveler
behavior. Further, variability of realizations may induce efforts of information acquisition