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Second best toll pricing within the framework of bounded rationality

In: Transportation Research Part B, 83, 74-90

Authors: Xuan Di, Henry X. Liu, Xuegang Jeff Ban

The network design problem is usually formulated as a bi-level program, assuming the user equilibrium is attained in the lower level program. Given boundedly rational route choice behavior, the lower-level program is replaced with the boundedly rational user equilibria (BRUE). The network design problem with boundedly rational route choice behavior is understudied due to non-uniqueness of the BRUE. In this study, thus, we mainly focus on boundedly rational toll pricing (BR-TP) with affine link cost functions. The topological properties of the lower level BRUE set are first explored. As the BRUE solution is generally non-unique, urban planners cannot predict exactly which equilibrium flow pattern the transportation network will operate after a planning strategy is implemented. Due to the risk caused by uncertainty of people’s reaction, two extreme scenarios are considered: the traffic flow patterns with either the minimum system travel cost or the maximum, which is the “risk-prone” (BR-TP-RP) or the “risk-averse” (BR-TP-RA) scenario respectively. The upper level BR-TP is to find an optimal toll minimizing the total system travel cost, while the lower level is to find the best or the worst scenario. Accordingly BR-TP can be formulated as either a min –min  or a min –max  program. Solution existence is discussed based on the topological properties of the BRUE and algorithms are proposed. Two examples are accompanied to illustrate the proposed methodology.