ABSTRACT
This chapter presents an analytical framework to measure the economic values of information systems for route navigation. The rational expectations hypothesis requires drivers to anticipate the conditions of the routes according to the objective probability distributions of travel time conditioned on all of their information. The basic rationale behind rational expectations equilibrium (REE) modelling is that many drivers possess little reliable information concerning alternative route choice decisions. The route choices occur at points in time, called periods, which denote by an index n. The index can have values from zero to infinity. The driver must decide before supply side uncertainty is resolved. But, demand side uncertainty is resolved before route choices are made. Travel time of both routes varies over periods due to the fluctuation of captive traffic and of all drivers' route choices.
