Auction-Based Tolling: An Economic Experiment to Address Risk-based Heterogeneous Bidding

Abstract

Auction-based tolling system is a hypothetical tolling system that could reflect the willingness to pay and value of time of toll users by allowing them to attend an auction and bid their desired toll price when compared to paying a fixed toll price as in traditional tolling system. This study conducted an economic experiment of an auction-based tolling system to observe the bidding behavior and capture heterogeneity in participants’ risk profiles. Regression mixture models were estimated, and three risk profiles were classified based on the model results, such as risk-neutral, riskaverse, and risk-seeking. It was found that different risk profiles had a significant impact on the revenue generated in the auction. Additionally, the discriminatory pricing rule as well as the positive incentive payoff structure was found to be more effective in maximizing the revenue compared to the uniform pricing rule and penalization payoff structure.