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

37 Pages Posted: 29 Sep 2015

See all articles by Shaun Larcom

Shaun Larcom

University of Cambridge

Ferdinand Rauch

University of Oxford

Tim Willems

University of Oxford - Nuffield Department of Medicine

Date Written: September 2015

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.

Keywords: experimentation, learning, optimization, rationality, search

JEL Classification: D83, L91, R41

Suggested Citation

Larcom, Shaun and Rauch, Ferdinand and Willems, Tim, The Benefits of Forced Experimentation: Striking Evidence from the London Underground Network (September 2015). CEPR Discussion Paper No. DP10854, Available at SSRN: https://ssrn.com/abstract=2666998

Shaun Larcom (Contact Author)

University of Cambridge ( email )

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

HOME PAGE: http://https://www.landecon.cam.ac.uk/directory/dr-shaun-larcom

Ferdinand Rauch

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Tim Willems

University of Oxford - Nuffield Department of Medicine ( email )

New Road
Oxford, OX1 1NF
United Kingdom

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