Working Paper: NBER ID: w26956
Authors: Antonio Bento; Kevin Roth; Andrew R. Waxman
Abstract: Taking advantage of repeated appearances of drivers in Los Angeles’s ExpressLanes under varied traffic conditions, we uncover the distribution of individuals’ preferences for time savings in a novel application of a hedonic pricing model. In this setting, we introduce the concept of the value of urgency, defined by a component of willingness to pay to enter tolled lanes to avoid a congested alternative route. The value of urgency does not scale in the amount of time saved, reflecting discrete penalties for late arrival. We show that this value accounts for 87% of total willingness to pay to use the ExpressLanes, while the contributions to WTP from other widely used valuation measures, such as the values of time and reliability, are negligible. We suggest that quality-of-service pricing that varies in real time and removes uncertainty over travel times creates new markets for individuals to avoid lateness and reveal their preferences for urgency.
Keywords: No keywords provided
JEL Codes: D47; D61; D62; H23; L51; L91; Q58; R41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| preferences for urgency (C69) | willingness to pay for travel time savings (R41) |
| value of urgency (D46) | willingness to pay for travel time savings (R41) |
| toll payments (R48) | travel time savings (R41) |
| value of urgency (D46) | economic evaluations of transportation projects (H43) |