Match!

The Braess Paradox and Coordination Failure in Directed Networks with Mixed Externalities

Published on Apr 1, 2018in Production and Operations Management2.17
· DOI :10.1111/poms.12827
Vincent Mak8
Estimated H-index: 8
(University of Cambridge),
Darryl A. Seale17
Estimated H-index: 17
(UNLV: University of Nevada, Las Vegas)
+ 4 AuthorsAmnon Rapoport48
Estimated H-index: 48
(UCR: University of California, Riverside)
Cite
Abstract
The Braess Paradox (BP) illustrates an important counterintuitive observation that adding links to a directed transportation network with usage externalities may raise the costs of all users. Research on the BP traditionally focuses on congestible networks. We propose and experimentally test a new and more dramatic version of the BP, where the network exhibits both congestion (negative externalities) and cost†sharing (positive externalities) characteristics. Our design also involves experimental manipulation of choice observability, where players choose routes simultaneously in one condition and sequentially in the other. We report robust behavioral evidence of the BP in both conditions. In nine of 10 sessions in the basic network, subjects coordinated successfully to achieve the welfare†maximizing equilibrium. But once the network was augmented with a new link, coordination failure resulted in a major proportion of subjects switching to a new route, resulting in a 37% average increase in individual travel cost across conditions.
  • References (34)
  • Citations (1)
Cite
References34
Newest
Published on Nov 1, 2015in Journal of Operations Management7.78
Caiyun Liu1
Estimated H-index: 1
(NU: Northwestern University),
Vincent Mak8
Estimated H-index: 8
(University of Cambridge),
Amnon Rapoport48
Estimated H-index: 48
(UCR: University of California, Riverside)
This study reports the results of an experiment on directed networks with positive externalities induced by cost-sharing. Subjects participated in a network game in which they had to choose between private and public transportations. If a player chose public transportation, then she shared the travel cost equally with other players making the same choice, whereas if she chose private transportation, then her travel cost was fixed. Travel costs on the private route were manipulated across the two...
Published on Aug 1, 2015in International Journal of Game Theory
Ron Holzman18
Estimated H-index: 18
(Technion – Israel Institute of Technology),
Dov Monderer23
Estimated H-index: 23
(Technion – Israel Institute of Technology)
A network congestion game is played on a directed, two-terminal network. Every player chooses a route from his origin to his destination. The cost of a route is the sum of the costs of the arcs on it. The arc cost is a function of the number of players who use it. Rosenthal proved that such a game always has a Nash equilibrium in pure strategies. Here we pursue a systematic study of the classes of networks for which a strong equilibrium is guaranteed to exist, under two opposite monotonicity ass...
Published on Feb 1, 2014in Production and Operations Management2.17
Amnon Rapoport48
Estimated H-index: 48
(UCR: University of California, Riverside),
Eyran J. Gisches8
Estimated H-index: 8
(UA: University of Arizona),
Vincent Mak8
Estimated H-index: 8
(University of Cambridge)
We study network games in which users choose routes in computerized networks susceptible to congestion. In the �unsplittable� condition, route choices are completely unregulated, players are symmetric, each player controls a single unit of flow and chooses a single origin�destination (O�D) path. In the �splittable� condition, which is the main focus of this study, route choices are partly regulated, players are asymmetric, each player controls multiple units of flow and chooses multiple O�D path...
Published on Jan 1, 2014in Journal of Public Economics1.77
Eva-Maria Steiger4
Estimated H-index: 4
(LMU: Ludwig Maximilian University of Munich),
Ro’i Zultan6
Estimated H-index: 6
(BGU: Ben-Gurion University of the Negev)
We study experimentally voluntary contributions to public goods when none, some, or all previous decisions are observable. When agents observe previous moves, they tend to condition their cooperation on observed cooperation. This leads to two effects of increased transparency: on the one hand, early movers are more likely to cooperate in order to encourage those who observe them to cooperate. On the other hand, as transparency increases, later movers are less likely to cooperate because they are...
Published on Jan 1, 2014in Journal of Economic Behavior and Organization1.40
Esteban F. Klor14
Estimated H-index: 14
(HUJI: Hebrew University of Jerusalem),
Sebastian Kube14
Estimated H-index: 14
(University of Bonn)
+ 1 AuthorsRo’i Zultan6
Estimated H-index: 6
(BGU: Ben-Gurion University of the Negev)
Conventional wisdom suggests that a global increase in monetary rewards should induce agents to exert higher effort. In this paper we demonstrate that this may not hold in team settings. In the context of sequential team production with positive externalities between agents, incentive reversal might occur, i.e., an increase in monetary rewards (either because bonuses increase or effort costs decrease) may induce agents that are fully rational, self-centered money maximizers to exert lower effort...
Vincent Mak8
Estimated H-index: 8
(University of Cambridge),
Amnon Rapoport48
Estimated H-index: 48
(UCR: University of California, Riverside)
Abstract Research on social dilemmas has largely been concerned with whether , and under what conditions, selfish decisions by autonomous individuals jointly result in socially inefficient outcomes. By contrast, considerably less emphasis has been placed on the extent of the inefficiency in those outcomes relative to the social optimum, and how the extent of inefficiency in theory compares with what is observed in experiments or practice. In this expository article, we introduce and subsequently...
Published on Jan 1, 2013in Mathematics and Computers in Simulation1.41
Arianna Dal Forno8
Estimated H-index: 8
(UNITO: University of Turin),
Ugo Merlone11
Estimated H-index: 11
(UNITO: University of Turin)
In Braess paradox adding an extra resource, and therefore an extra available choice, enriches the complexity of the game from a dynamic perspective. The analysis of the cycles and the bifurcations helps to visualize how this complexity changes, in a quite new way with respect to what is provided by the so far literature. We derive the conditions for the creation and the destruction of periodic cycles, as well as the analytical expressions of the bifurcation conditions, by studying the occurrence...
Published on Aug 1, 2012in Theory and Decision0.68
Eyran J. Gisches8
Estimated H-index: 8
(UA: University of Arizona),
Amnon Rapoport48
Estimated H-index: 48
(UCR: University of California, Riverside)
The Braess Paradox (BP) is a counterintuitive finding that degrading a network that is susceptible to congestion may decrease the equilibrium travel cost for each of its users. We illustrate this paradox with two networks: a basic network with four alternative routes from a single origin to a single destination, and an augmented network with six alternative routes. We construct the equilibrium solutions to these two networks, which jointly give rise to the paradox, and subject them to experiment...
Published on Feb 13, 2012in Physical Review Letters9.23
Marco G. Pala18
Estimated H-index: 18
,
S. Baltazar2
Estimated H-index: 2
+ 7 AuthorsS. Huant24
Estimated H-index: 24
(UJF: Joseph Fourier University)
We present evidence for a counterintuitive behavior of semiconductor mesoscopic networks that is the analog of the Braess paradox encountered in classical networks. A numerical simulation of quantum transport in a two-branch mesoscopic network reveals that adding a third branch can paradoxically induce transport inefficiency that manifests itself in a sizable conductance drop of the network. A scanning-probe experiment using a biased tip to modulate the transmission of one branch in the network ...
Published on Aug 4, 2010in The RAND Journal of Economics1.63
Eyal Winter25
Estimated H-index: 25
(HUJI: Hebrew University of Jerusalem)
This article studies the effect of transparency among peers on the principal's cost of providing incentives. Using directed graphs to represent peer information, we show that under complementarity the cost of providing incentives is decreasing with the level of transparency within the organization. We also investigate the role of the architecture of the information in boosting incentives. In arguing that substitution impedes the benefits of transparency, we will compare function-based teams with...
View next paperDegrading network capacity may improve performance: information effects in the Braess Paradox