matthj

See also http://www.nytimes.com/2009/12/27/business/economy/27view.ht...

Unfortunately, Waze has at least two incentives not to provide socially optimal paths. First, individuals would have an incentive to find individually-optimal paths by using a different app that provides them. Second, it seems likely that more people turn Waze on when traffic is bad, so social suboptimality might actually be good for Waze.

On the other hand, with socially optimal traffic patterns there would be induced demand and more drivers would come on the roads and potentially use Waze.

It's actually difficult to know what would make Waze better off, providing socially optimal routes or individually optimal routes.

Waze might also behave like many companies and ask for subsidies from local governments for turning on the social optimization, and the local governments are ill-equiped to know how much to pay.

Networked traffic routing apps like Waze ought to nullify the Braess' paradox; if everyone used Waze, new roads would always have a positive marginal impact.