Switching Behavior in Response to Re-Entry of Uber and Lyft: A Revealed Study in Austin, TX

16 Pages Posted: 12 Aug 2017

See all articles by Xuan Di

Xuan Di

Columbia University

Tayo Fabusuyi

University of Michigan at Ann Arbor - Transportation Research Institute; Numeritics

Chris Simek

Texas A&M University - Texas Transportation Institute

Xi Chen

University of Michigan at Dearborn

Robert Hampshire

University of Michigan at Ann Arbor - Transportation Research Institute

Date Written: August 1, 2017

Abstract

In May 2016, Uber and Lyft suspended services following the defeat of Proposition 1 in Austin, TX. In May 2017, they relaunched service after Proposition 1 was overridden. This paper describes a pilot study aimed at predicting whether those who are using services from other transportation network companies (TNCs) will switch their choice to either Uber or Lyft. At the time of writing this article, Uber and Lyft are trying to increase their market share using an aggressive pricing strategy, thus a survey at this stage will not reflect people’s stable mode choice. Instead, we use survey data collected between November 2016 and December 2016 when Uber and Lyft’s service were still suspended. That survey was primarily designed to understand the impact of service suspension on travel behavior. However, it included several relevant questions asking about users’ trip costs before and after the suspension, whether they were satisfied with the current TNC service, and whether they were inconvenienced by the lack of Uber or Lyft. Inferring from these surrogate responses, we are able to make reasonable assumptions about who will switch back to Uber or Lyft and who will not once they resume service.

We hypothesize that people will not switch unless a given trip’s cost saving is beyond a positive threshold due to boundedly rational behavior. Based on this hypothesis, we use probit regression to estimate a parameter describing the degree to which people are willing to switch, termed “indifference band”. Among others, the study revealed that the cohort of younger riders, people who experience higher trip cost saving, or individuals who are extremely inconvenienced by the service suspension, or those who use TNC for social purposes, have lower indifference bands and are thus more likely to switch to Uber or Lyft. The results of this study will assist policy-makers in understanding the impact of policy and regulations on people’s mode choice behavior.

Keywords: Transportation Network Companies, Service Disruption, Indifference Band

Suggested Citation

Di, Xuan and Fabusuyi, Tayo and Simek, Chris and Chen, Xi and Hampshire, Robert, Switching Behavior in Response to Re-Entry of Uber and Lyft: A Revealed Study in Austin, TX (August 1, 2017). Available at SSRN: https://ssrn.com/abstract=3016561 or http://dx.doi.org/10.2139/ssrn.3016561

Xuan Di (Contact Author)

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

Tayo Fabusuyi

University of Michigan at Ann Arbor - Transportation Research Institute ( email )

2901 Baxter Road
Ann Arbor, MI 48109
United States

Numeritics ( email )

5907 Penn Avenue
Suite 313
Pittsburgh, PA 15206

Chris Simek

Texas A&M University - Texas Transportation Institute ( email )

College Station, TX 77843-3135
United States

Xi Chen

University of Michigan at Dearborn ( email )

4901 Evergreen Road
Dearborn, MI 48128-1491
United States

Robert Hampshire

University of Michigan at Ann Arbor - Transportation Research Institute ( email )

2901 Baxter Road
Ann Arbor, MI 48109
United States

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