Including the Costs of Uncertainty

This chapter complements the previous chapters by including a term related to the costs of travel time uncertainty into the generalised travel cost function. By doing so, the model presented hereafter gains much in realism, as the importance of uncertainty costs has frequently been stressed in the literature (Arnott et al., 1990b; Hendrickson and Kocur, 1981). Furthermore, the work in this chapter advances Arnott et al. (1996) in two respects. First, besides public information also the case of club information is considered. Club information deals with the situation in which only a specific group of travellers is provided with information. Second, as in the previous chapter, attention will be paid to endogenous information provision, implying that travellers will acquire information only if the private benefits of the information exceed the private costs. Arnott et al. (1991, 1996) assumed that information is available for free for the whole population.