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Title: The Benefits of Forced Experimentation: Striking Evidence from the London Underground Network

Author(s): Shaun Larcom, Ferdinand Rauch and Tim Willems

Publication Date: September 2015

Keyword(s): experimentation, learning, optimization, rationality and search

Programme Area(s): International Trade and Regional Economics

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.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=10854

Bibliographic Reference

Larcom, S, Rauch, F and Willems, T. 2015. 'The Benefits of Forced Experimentation: Striking Evidence from the London Underground Network'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=10854