A new lattice model of traffic flow based on Nagatani's model is proposed by taking the effect of driver's memory into account. The linear stability condition of the extended model is obtained by using the linear stability theory. The analytical results show that the stabile area of the new model is larger than that of the original lattice hydrodynamic model by adjusting the driver's memory intensity parameter p of the past information in the system. The modified KdV equation near the critical point is derived to describe the traffic jam by nonlinear analysis, and the phase space could be divided into three regions: the stability region, the metastable region, and the unstable region, respectively. Numerical simulation also shows that our model can stabilize the traffic flow by considering the information of driver's memory.

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