Misinformation and misperception in the market for parking

Abstract

Parking regulations have been widely adopted by cities as a tool to tackle traffic-related externalities. Both researchers and practitioners have proposed parking policy interventions that tend to rely on the assumption that parkers have perfect information about the availability of parking options and their characteristics (prices and quality) when determining consumers’ behavior. However, research shows that when information acquisition (search) is costly it is rational for consumers not to be fully informed at the expense of their taking non-optimal decisions, with negative welfare implications.We conduct an empirical study of the level of knowledge and information held by drivers in the car parking market. We draw on a survey conducted with 576 garage customers in Barcelona to estimate different regression models to assess how drivers transform information into actual knowledge, identifying the factors that aggravate/mitigate misinformation and misperception (subjective information levels and its accuracy). We find that parkers know little about available parking alternatives and their prices, and the accuracy of their knowledge is poor and biased towards prioritizing curbside parking. Costly search does not help drivers increase their knowledge levels, with garage facilities’ and surrounding areas’ characteristics playing a relevant role. We also find that garages have effective obfuscation strategies to keep drivers uninformed and exploit their localized market power by reducing price saliency and increasing fee complexity. Our results suggest that information should be carefully considered in the design and implementation of parking policy interventions and transport information systems, in order to avoid undesired market distortions.