Evaluating Alternative Operations Strategies to Improve Travel Time ...

SHRP 2 L11: Final Appendices
Comment #8
By assuming that “recurring and rare phenomena arise out of processes with very different
stochastic properties”, the authors are proposing using a mixture of distributions to characterize
events that affect time travel reliability. One of the difficulties in using mixtures is identifying the
point where the distributions should be joined; there is no discussion of this in the appendix. The
justification for using mixtures is that while recurring events, where there is often ample data for
analysis, might be well-characterized by a normal distribution, rare events tend to fall into an
extreme tail which would result in an overall distribution that has very fat tail.
Response #8:
The authors appreciate and agree with these comments. Ignoring the prospect of rare events, and
using pure gaussian assumptions instead, is at the heart of many financial and engineering
catastrophes, including Long-Term Capital, and elements of the current financial crisis. One of the
reasons that we distinguish between recurring and rare events in our discussion is to draw attention
to the rare event issue. Unfortunately, implementation of strategies to protect against rare events in
a cost-effective way is very difficult because of the problem of characterizing the event distribution
and the complexity of mathematically representing the proper investment strategy. This is
especially challenging in the setting of highway infrastructure development and operation. We feel
the best we can do in a paper such as this is to highlight the issue, offer the skeleton of a
methodology, and provide citations to (the very few) papers that hint at how to embed an
investment strategy in a rare event setting.
DETERMINING THE ECONOMIC BENEFITS OF IMPROVING TRAVEL-TIME RELIABILITY Page B-38