Information value and sequential decision-making in a transport setting:: an experimental study

In economic models of dynamic choice under uncertainty, the "information value" is the highest price an individual is willing to pay for information. This amount usually increases as information becomes more specific. Applying experimental economics an experimental game has been constructed in which individuals choose between alternative congested transport modes to try to arrive at a destination at a specified time. To reduce the risk associated with modal choice, each subject Can buy information about traffic levels. Two information messages are offered one after the other, the second giving more information. The results show the value individuals ascribe to information in a context of increasing information where information is not free, and the price of information price and infrastructure capacities vary. Individuals compare the utility of information to its cost and this calculation is an important part of the comparison between risk with regard to travel time and the monetary travel cost. Moreover, individuals choose to buy information when the variance of payoffs for the chosen route is sufficiently high. The paper shows that the economic model of dynamic choice seems to provide a reasonable approximation of individual values. In particular, the willingness to pay for more detailed information is higher than for more general information. Finally, it shows how an experimental economics technique can produce empirical data to test theoretical models dealing with transport behavior. (C) 2003 Elsevier Science Ltd. All rights reserved.