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Vehicle Safety The following application is based on the paper: Tay. Richard. "The Prisoners
Dilemma and Vehicle Safety: Some Policy Implication,"Journal of Transport Economics &
Policy. 36:3. September 2002, 491-95. Road safety has been a major public policy concern. For
a car. there are two aspects to safety: Crashworthiness of the vehicle and its occupant protection.
Non-aggressiveness (minimum damage to non-occupants including pedestrians, cyclists, and
occupants of other vehicles). The conventional approach to vehicle safety regulation in most
countries, and most reports in the media tend to focus most on crashworthiness. This misplaced
emphasis has played a major role in the general misconception that bigger vehicles are safer, and
might have contributed to the inefficiencies in resource allocation in the vehicle manufacturing
industry and the road safety sector. To illustrate the situation, the following table shows the
relative fatality risk in a frontal collision between two cars. Here the extreme vehicle sizes of
4WD and small car are considered.The fatality risk is the number of fatalities per number of
occupants, and the relative fatality risk is cars to the fatality risk of collision between two 4WD
cars. For example. 0.8 in the first cell means small cars is 0.8 times of the number of fatalities
per occupant in collision between two 4WD cars, per occupant in collision between a 4WD and a
small car for a small car is 17 times of the number. Is the situation depicted in the table the
classic prisoner's dilemma problem? Explain why. What do you suggest to encourage
consumers to buy small cars? Do you agree with a tax on more aggressive vehicles? What about
an increase in insurance fees for larger vehicles?
Solution
a) The prisoner's dilemma is a decision analysis in which if two people act in their own self
interest then it will not give an ideal outcome. However when the cooperate with each other then
they would be better off. Yes it is a case of prisoner's dilemma because number of fatalities
would be less when collusion is between two small cars. However when their is collusion
between one big and one small car or between two big cars then fatality would be more.
b) No I will not suggest to buy large cars because if there is collusion of a big car with small car
then it will result in more fatalities. Yes, tax on more aggressive cars will increase the price of
them and consumer will try to buy its substitutes i.e non aggressive cars. Increase in insurance
fee for larger vehicals will also resist consumers from buying large cars. Hence their demand will
fall.

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Vehicle Safety The following application is based on the paper Tay..pdf

  • 1. Vehicle Safety The following application is based on the paper: Tay. Richard. "The Prisoners Dilemma and Vehicle Safety: Some Policy Implication,"Journal of Transport Economics & Policy. 36:3. September 2002, 491-95. Road safety has been a major public policy concern. For a car. there are two aspects to safety: Crashworthiness of the vehicle and its occupant protection. Non-aggressiveness (minimum damage to non-occupants including pedestrians, cyclists, and occupants of other vehicles). The conventional approach to vehicle safety regulation in most countries, and most reports in the media tend to focus most on crashworthiness. This misplaced emphasis has played a major role in the general misconception that bigger vehicles are safer, and might have contributed to the inefficiencies in resource allocation in the vehicle manufacturing industry and the road safety sector. To illustrate the situation, the following table shows the relative fatality risk in a frontal collision between two cars. Here the extreme vehicle sizes of 4WD and small car are considered.The fatality risk is the number of fatalities per number of occupants, and the relative fatality risk is cars to the fatality risk of collision between two 4WD cars. For example. 0.8 in the first cell means small cars is 0.8 times of the number of fatalities per occupant in collision between two 4WD cars, per occupant in collision between a 4WD and a small car for a small car is 17 times of the number. Is the situation depicted in the table the classic prisoner's dilemma problem? Explain why. What do you suggest to encourage consumers to buy small cars? Do you agree with a tax on more aggressive vehicles? What about an increase in insurance fees for larger vehicles? Solution a) The prisoner's dilemma is a decision analysis in which if two people act in their own self interest then it will not give an ideal outcome. However when the cooperate with each other then they would be better off. Yes it is a case of prisoner's dilemma because number of fatalities would be less when collusion is between two small cars. However when their is collusion between one big and one small car or between two big cars then fatality would be more. b) No I will not suggest to buy large cars because if there is collusion of a big car with small car then it will result in more fatalities. Yes, tax on more aggressive cars will increase the price of them and consumer will try to buy its substitutes i.e non aggressive cars. Increase in insurance fee for larger vehicals will also resist consumers from buying large cars. Hence their demand will fall.