Structuring Urban Transportation Planning Decisions: The Use of Statistical Decision Theory

It is argued that there are difficulties in current transportation practice because the existing process does not reflect adequately the context in which urban transportation investments are actually made. Such investments are made sequentially and the planner therefore has the opportunity to monitor the performance of implemented projects and to use this information to reappraise future investments. Decisions are also made under conditions of uncertainty with respect to future demand and costs of construction and operation. This paper demonstrates how some principles of statistical decision theory may be used to structure the sequential nature of transportation investments and to provide for formal treatments of uncertainty and the value of information. A hypothetical example is presented to illustrate the application of the framework developed.