Traffic Network Equilibria with Rational Expectations

Abstract

This paper provides with a new framework for traffic network equilibria with incomplete information. The basic element of our approach is differential information; different drivers have different information about their environment; they choose routes based on their private (differentiated) information. The purpose of this paper is to develop a general equilibrium model that makes explicit information or beliefs that a driver has as part of his/her primitive characteristics. The model we present is a reinterpretation on Harsanyi’s incomplete information game in a network game context. The difference from Harsanyi’s approach is the explicit consideration of rational expectations formation by drivers. A numerical illustration may provide us with a pedagogical insight on traffic network equilibria with incomplete information.