"Traffic Priority Mechanisms"
In the future world of self-driving vehicles, intersections will be managed by computers that send individual commands to each passing vehicle. This paper proposes to make traffic priority contingent on self-reported value of time of vehicle occupants. A model of two merging roads with stochastic traffic is developed. Algorithms for calculation of optimal exit sequences, accounting for time value heterogeneity, are characterized. Welfare costs of limited planning horizon are assessed. Incentive compatible scheme of payment for priority is calculated. The winners and losers of the proposed mechanism are described. Optimality of traffic volume and composition under optimal exit regulation is established.