WARDROP EQUILIBRIA WITH RISK-AVERSE USERS ( FORTHCOMING IN TRANSPORTATION SCIENCE )

Network games can be used to model competitive situations in which agents select routes to minimize their cost. Common applications include traffic, telecommunication and distribution networks. Although traditional network models have assumed that realized costs only depend on congestion, in most applications they also have an uncertain component. We extend Wardrop’s network game (1952) by adding random deviations, which are independent of the flow, to the cost functions that model congestion in each arc. We map these uncertainties into a Wardrop equilibrium model with nonadditive path costs. The cost on a path is given by the sum of the congestion on its arcs plus a constant safety margin determined by risk-averse agents. First, we prove that an equilibrium for this game always exists and is essentially unique. Then, we introduce three specific equilibrium models that fall within this framework: the percentile equilibrium where agents select paths that minimize a specified percentile of the uncertain cost; the added-variability equilibrium where agents add a multiple of the variability of the cost of each arc to the expected cost; and the robust equilibrium where agents select paths by solving a robust optimization problem that imposes a limit on the number of arcs that can deviate from the mean. The percentile equilibrium is difficult to compute because minimizing a percentile among all paths is computationally hard. Instead, the added-variability and robust Wardrop equilibria can be computed efficiently in practice: the former reduces to a standard Wardrop equilibrium problem and the latter is found using a column generation approach that repeatedly solves robust shortest path problems, which are polynomially solvable. Through computational experiments of some random and some realistic instances, we explore the benefits and trade-offs of the proposed solution concepts. We show that when agents are risk averse, both the robust and added-variability equilibria better approximate percentile equilibria than the classic Wardrop equilibrium.