The Game Theory of Light Rail Platforms

In the tri-county area of TriMet’s service district, the proven reliability of buses is being slowly replaced by light rail, one capital project at a time. How this transformation might change passenger fare compliance is something TriMet needs to carefully consider.

Light rail is not cheap, but the riders’ costs are subsidized. The price of these fares has been intentionally set low, but the systems’ capacity is not designed to be free to the public. As more of this mode of mass transit gets built, enforcing riders’ payment could become more important to economize use during congested times, let alone help finance the service.

On MAX, payment works on the “honor system.” One question worth asking is: why use an honor system at all? The answer is twofold. First, an honor system seeks to avoid the higher fixed costs of a barrier system and the long-term depreciation costs that follow.

Second, it seeks to reduce the friction to riders having to follow a rat race before boarding their train. A barrier system is capital intensive while an honor system is labor intensive, because it requires the use of fare inspectors.

There is an element of game theory behind designing the right system. An optimal strategy of inspection frequency in an honor system is itself a subgame of the decision of whether or not to choose barrier infrastructure in the first place.

The cost of implementing an inspection regime should be factored into a roll-back analysis of which system to build. If an honor system is chosen, its payout is contingent on the optimum frequency of inspection somewhere in between a 100% inspection rate and a 0% inspection rate, such that the after-inspection amount of net passenger revenue is maximized by this balanced level of expenditures on inspector wages.

Besides the relative cost of labor and capital, the two factors that matter the most in this decision tree are capacity and social trust. The larger the capacity of the transportation mode the more advantageous barrier systems are as the cost of capital is amortized over higher units of output. Thus barrier systems make more sense for heavy rail than light rail.

Also, honor systems cost less in cultures with high social trust. Thus MAX’s current design makes more sense in cultures with a higher degree of aversion to cheating. Is the Portland area that kind of culture? It might be, but what kind of data exists to empirically confirm that?

When regional planners began investing in this light rail system, to what degree did they take any of these factors into consideration? We see hints of future planning to build more light rail, but is there any serious strategic planning going into these major capital expenditures?

Eric Shierman lives in Salem and is the author of A Brief History of Political Cultural Change.