From the latest issue of the journal Cognition, I found this interesting paper on how virtual taxi-cab drivers, use road signs and other cues to navigate.
Learning your way around town: How virtual taxicab drivers learn to use both layout and landmark information,
Ehren L. Newmana, Jeremy B. Caplana, Matthew P. Kirschena, Igor O. Koroleva, Robert Sekulera and Michael J. Kahana
Abstract: By having subjects drive a virtual taxicab through a computer-rendered town, we examined how landmark and layout information interact during spatial navigation. Subject-drivers searched for passengers, and then attempted to take the most efficient route to the requested destinations (one of several target stores). Experiment 1 demonstrated that subjects rapidly learn to find direct paths from random pickup locations to target stores. Experiment 2 varied the degree to which landmark and layout cues were preserved across two successively learned towns. When spatial layout was preserved, transfer was low if only target stores were altered, and high if both target stores and surrounding buildings were altered, even though in the latter case all local views were changed. This suggests that subjects can rapidly acquire a survey representation based on the spatial layout of the town and independent of local views, but that subjects will rely on local views when present, and are harmed when associations between previously learned landmarks are disrupted. We propose that spatial navigation reflects a hierarchical system in which either layout or landmark information is sufficient for orienting and wayfinding; however, when these types of cues conflict, landmarks are preferentially used.