Self-Fulfilling Signal of an Endogenous State in Network Congestion Games

Abstract

We consider the problem of coordination via signaling in network congestion games to improve social welfare deteriorated by incomplete information about traffic flow. Traditional studies on signaling, which focus on exogenous factors of congestion and ignore congestion externalities, fail to discuss the oscillations of traffic flow. To address this gap, we formulate a problem of designing a coordination signal on endogenous information about traffic flow and introduce a it self-fulfilling characteristic of a signal that guarantees an outcome flow consistent with the signal itself without causing the unwanted oscillation. An instance of the self-fulfilling signal is shown in the case of a Gaussian signal distribution. In addition, we show simple numerical examples. The results reveal how a self-fulfilling signal suppresses the oscillation and simultaneously improves social welfare through improved network efficiency.