Game Theory and Traffic Rules

Game theory attempts to explain our behavior in situations where the success of our choices are impacted by the choices of others. Price wars are the most common example. If Pepsi cuts prices, assuming elastic demand, sales will increase and so will profits. But if Coke follows suit, Pepsi's action will be neutralized such that both Coke and Pepsi end up with lower profits than what they would make if prices werent cut in the first place. So letting prices be is the best course of action for both, which is the conclusion they will eventually reach after the game is played multiple times.

I got thinking if this explains the problem with our traffic rules. When we all follow rules, then it gives those who break them an advantage. Let's say the rule is that we stick to our lanes regardless of traffic. Now, if the traffic is slow, someone can cut across lanes and weave through traffic, assured that everyone is driving in their lane. But once that happens, the rest will naturally feel cheated and start doing it too, and we end up with massive chaos.

I see two ways of addressing the problem. One is to remove the incentive for breaking rules, by imposing hefty and consistent fines, which is impossibly difficult to do in our country. The second is to let people play this "game" enough times until they realize that we are better off following the rules. It doesnt mean every single person has to experience chaos before sanity returns. Once enough people decide to follow rules, a critical mass is reached. You have - tada - a tipping point. You see people following rules, then more people follow rules and so on. The concept of social proof kicks in.

Its not as far-fetched as it sounds. I think it partly explains why Mumbai has better lane discipline and civic sense than other cities - people here have seen traffic chaos so many more times.

I think the unfortunate part is when everyone starts to follow the rules, some of us will be tempted to break them and get an unfair advantage. And when there is no system of fines or penalty, more people will start doing it creating another tipping point and the cycle continues...