Dynamic Matching for Real-Time Ridesharing

Stochastic Systems

76 Pages Posted: 28 Sep 2016 Last revised: 16 May 2019

See all articles by Erhun Ozkan

Erhun Ozkan

Koc University - College of Administrative Sciences and Economics

Amy Ward

The University of Chicago Booth School of Business

Date Written: June 15, 2017

Abstract

In a ridesharing system, arriving customers must be matched with available drivers. These decisions affect the overall number of customers matched, because they impact whether or not future available drivers will be close to the locations of arriving customers. A common policy used in practice is the closest driver (CD) policy that offers an arriving customer the closest driver. This is an attractive policy because it is simple and easy to implement. However, we expect that parameter-based policies can achieve better performance.

We propose matching policies based on a continuous linear program (CLP) that accounts for (i) the differing arrival rates of customers and drivers in different areas of the city, (ii) how long customers are willing to wait for driver pick-up, (iii) how long drivers are willing to wait for a customer, and (vi) the time-varying nature of all the aforementioned parameters. We prove asymptotic optimality of a forward-looking CLP-based policy in a large market regime and of a myopic LP-based matching policy when drivers are fully utilized. When pricing affects customer and driver arrival rates, and parameters are time homogeneous, we show that asymptotically optimal joint pricing and matching decisions lead to fully utilized drivers under mild conditions.

Keywords: Ridesharing Platforms, Dynamic Matching, Asymptotic Optimality

Suggested Citation

Ozkan, Erhun and Ward, Amy, Dynamic Matching for Real-Time Ridesharing (June 15, 2017). Stochastic Systems. Available at SSRN: https://ssrn.com/abstract=2844451 or http://dx.doi.org/10.2139/ssrn.2844451

Erhun Ozkan (Contact Author)

Koc University - College of Administrative Sciences and Economics ( email )

Rumelifeneri Yolu
Sariyer 80910, Istanbul
Turkey

Amy Ward

The University of Chicago Booth School of Business

5807 S Woodlawn Ave
Office 516
Chicago, IL 60637
United States

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