Majicman Notes

One of the things we’re looking at is whether consumers usually make the best decision, but it’s never been empirically tested using a large consumer dataset such as this one,” said co-author Dr Ferninand Rauch from Oxford’s Department of Economics. “Our findings illustrate that people might get stuck with suboptimal decisions because they don’t experiment enough.”

According to the authors, being forced to alter a routine, whether that’s due to a Tube strike or government regulation, can often lead to net benefits, as people or corporations are forced to innovate.

In economics, this is known as the Porter hypothesis.

“For the small fraction of commuters who found a better route, when multiplied over a longer period of time, the benefit to them actually outweighs the inconvenience suffered by many more,” said co-author Dr Shaun Larcom of Cambridge’s Department of Land Economy. “The net gains came from the disruption itself.”

“Given that a significant fraction of commuters on the London underground failed to find their optimal route until they were forced to experiment, perhaps we should not be too frustrated that we can’t always get what we want, or that others sometimes take decisions for us,” said co-author Dr Tim Willems, also from Oxford’s Department of Economics. “If we behave anything like London commuters and experiment too little, hitting such constraints may very well be to our long-term advantage ”

Reference:

Larcom, Shaun, Ferdinand Rauch and Tim Willems (2015), “The Benefits of Forced Experimentation: Striking Evidence from the London Underground Network”, University of Oxford Working Paper. 

https://www.cam.ac.uk/research/news/london-tube-strike-produced-net-economic-benefit