People tell me that it is impossible to have self-driving cars in a major city because that would require something close to strong artificial intelligence. I personally don't think there is a need for full blown AI. I believe we could fully automate traffic in any big city using current technology. The system would use collision avoidance software together with RFID devices embedded in the road and readers in the vehicles. RFID would be used to communicate info about the location of the vehicle within the city. They could also be used to signal how far the vehicle is from either curb. In addition, vehicles could receive itinerary information and traffic conditions from a central computer via a city-wide wi-fi or similar network.
The beauty of automated transportation is that it could significantly reduce the number of cars on the road and help save energy. Consider that most vehicles are idle most of the time anyway. Big cities could reduce pollution and energy consumption by banning private vehicles altogether. City dwellers and visitors would be given a pager that they can use to summons transportation at the push of a button. The nearest parked vehicle would then drive itself to the passengers' location and take them to their destination.
There is only one catch, however. Such a system would involve highly complex software. Concern over things like safety, liability and development cost would kill the project before it is even started. The only solution is to adopt a non-algorithmic synchronous software model which is what Project COSA is about.