Monday, September 24, 2012

Slow drivers at traffic lights

Good morning everyone. Have you ever fallen victim of slow drivers at traffic lights? Allow me to explain. You are driving along when all of a sudden you notice that the car in front of you is reducing its speed. You also notice that you are approaching a green traffic light. As it happens (in most of the times) you are in a hurry so you really want to make it across the junction before the red light stops traffic.

A few feet (or meters) before the junction the traffic light turns yellow and the slow driver in front of you floors the gas pedal to beat the red light. While he makes it across the junction, you and a few other frustrated drivers are forced to wait because the light has now turned red.

This example above points to the fact that the slow driver is not familiar with the concept of Pareto efficiency. Pareto efficiency or Pareto optimality occurs when it is no longer possible to make one individual better off without making someone else worse off. Pareto optimality is rather rare. Instead Pareto improvements can be made with the appropriate modification of human behavior.

If for example the driver in front of you was driving normally, then the maximum number of drivers would make it past the junction. Such behavior would lead to Pareto improvement as now more drivers are better off without making someone worse off. Wouldn't it be nice if everyone was better off?

Have a Pareto optimal day!

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