Working Paper: CEPR ID: DP10854
Authors: 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 behavior. 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 behavior. Instead, individuals seem to under-experiment in normal times, as a result of which constraints can be welfare-improving.
Keywords: experimentation; learning; optimization; rationality; search
JEL Codes: D83; L91; R41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Commuters who were forced to experiment during the strike (R41) | Less likely to return to their pre-strike modal commute in the post-strike period (R41) |
| The strike (J52) | Significant reduction in commuting times for treated commuters (R41) |
| Forced experimentation during the strike (C90) | Lasting changes in behavior and improved efficiency (D29) |