[oceanpumpkins]

Does Waze optimize for the socially optimal distribution over the whole network, or does it optimize for each individual traveller?

If it optimizes for each individual traveller, then Braess' paradox still applies even with Waze because all the travelers in Braess' paradox make the individually optimal choice.

If it optimizes for the socially optimal distribution, then it does solve the problem. But this sounds like an optimization problem that would be really hard to formulate and solve in practice, so I'd be surprised if Waze (or any other networked traffic app) did it right now. Maybe eventually?