Congestion Pricing With Heterogeneous Travellers

Verhoef, E.T. [Promotor]Rietveld, P. [Promotor

Step tolling with price sensitive demand: Why more steps in the toll makes the consumer better off

Most dynamic models of congestion pricing use fully time-variant tolls. However, in practice, tolls are uniform over the day, or at most have just a few steps. Such uniform and step tolls have received surprisingly little attention from the literature. Moreover, most models that do study them assume that demand is insensitive to the price. This seems an empirically questionable assumption that, as this paper finds, strongly affects the implications of step tolling for the consumer. In the bottleneck model, first-best tolling has no effect on the generalised price, and thus consumer surplus remains the same as without tolling. Conversely, under price-sensitive demand, step tolling increases the price, making the consumer worse off. The more steps the toll has, the closer it approximates the first-best toll, thereby increasing the welfare gain and making consumers better off. This indicates the importance for real-world tolls to have as many steps as possible: this not only raises welfare, but may also increase the political acceptability of the scheme by making consumers better off

Step by step: Revisiting step tolling in the bottleneck model

In most dynamic traffic congestion models, congestion tolls must vary continuously over time to achieve the full optimum. This is also the case in Vickrey's (1969) 'bottleneck model'. To date, the closest approximations of this ideal in practice have so-called 'step tolls', in which the toll takes on different values over discrete time intervals, but is constant within each interval. Given the prevalence of step tolling schemes they have received surprisingly little attention in the literature. This paper compares two step-toll schemes that have been studied using the bottleneck model by Arnott, de Palma and Lindsey (1990) and Laih (1994). It also proposes a third scheme in which late in the rush hour drivers slow down or stop just before reaching a tolling point, and wait until the toll is lowered from one step to the next step. Such behaviour has indeed been observed in reality. Analytical derivations and numerical modelling show that the three tolling schemes have different optimal toll schedules and reduce total social costs by different percentages. These differences persist even in the limit as the number of steps approaches infinity. Braking lowers the welfare gain from tolling by 14% to 21% in the numerical example. Therefore, preventing or limiting braking seems important in designing step-toll systems

Exploring the trade-off between quality and fairness in human partner choice

Partner choice is an important force underpinning cooperation in humans and other animals. Nevertheless, the mechanisms individuals use to evaluate and discriminate among partners who vary across different dimensions are poorly understood. Generally, individuals are expected to prefer partners who are both able and willing to invest in cooperation but how do individuals prioritize the ability over willingness to invest when these characteristics are opposed to one another? We used a modified Dictator Game to tackle this question. Choosers evaluated partners varying in quality (proxied by wealth) and fairness, in conditions when wealth was relatively stable or liable to change. When both partners were equally fair (or unfair), choosers typically preferred the richer partner. Nevertheless, when asked to choose between a rich-stingy and a poor-fair partner, choosers prioritized fairness over wealth—with this preference being particularly pronounced when wealth was unstable. The implications of these findings for real-world partner choice are discussed