Inform pedestrians, not drivers

Inform pedestrians, not drivers:

From Sacha Kapoor and Arvind Magesan (pdf):

Most empirical studies on the role of information in markets analyze policies that reduce asymmetries in the information that market participants possess, often suggesting that the policies improve welfare. We exploit the introduction of pedestrian countdown signals – timers that indicate when traffic lights will change – to evaluate a policy that increases the information that all market participants possess. We find that although countdown signals reduce the number of pedestrians struck by automobiles, they increase the number of collisions between automobiles. We also find that countdown signals caused more collisions overall. The findings imply welfare gains can be attained by revealing the information to pedestrians and hiding it from drivers. We conclude that policies which increase asymmetries in information can improve welfare.

Hat tip goes to @m_sendhil.

(Via Marginal Revolution)

David Levinson

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This page contains a single entry by David Levinson published on April 11, 2013 3:13 PM.

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