Dynamic Pricing and Matching in Ride-Hailing Platforms

38 Pages Posted: 30 Oct 2018 Last revised: 14 Jan 2019

See all articles by Nikita Korolko

Nikita Korolko

Uber Technologies, Inc.

Dawn Woodard

Uber Technologies, Inc.

Chiwei Yan

Uber Technologies, Inc.

Helin Zhu

Uber Technologies, Inc.

Date Written: October 1, 2018

Abstract

Ride-hailing platforms such as Uber, Lyft and DiDi have achieved explosive growth and reshaped urban transportation. The theory and technologies behind these platforms have become one of the most active research areas in the fields of economics, operations research, computer science, and transportation engineering. In particular, advanced matching and dynamic pricing algorithms -- the two key levers in ride-hailing -- have received tremendous attention from the research community and are continuously being designed and implemented at industrial scales by ride-hailing platforms. We first review matching and dynamic pricing techniques in ride-hailing, and show that these are critical for providing an experience with low waiting time for both riders and drivers. Then we link the two levers together by studying a pool-matching mechanism called dynamic waiting that varies rider waiting and walking before dispatch, which is inspired by a recent carpooling product Express Pool from Uber. We show using data from Uber that by jointly optimizing dynamic pricing and dynamic waiting, price variability can be mitigated, while increasing capacity utilization, trip throughput, and welfare. We also highlight several key practical challenges and directions of future research from a practitioner's perspective.

Keywords: Ride-Hailing, Ride-Sharing, Matching, Dynamic Pricing, Dynamic Waiting

Suggested Citation

Korolko, Nikita and Woodard, Dawn and Yan, Chiwei and Zhu, Helin, Dynamic Pricing and Matching in Ride-Hailing Platforms (October 1, 2018). Available at SSRN: https://ssrn.com/abstract=3258234 or http://dx.doi.org/10.2139/ssrn.3258234

Nikita Korolko

Uber Technologies, Inc. ( email )

San Francisco, CA 94158

Dawn Woodard (Contact Author)

Uber Technologies, Inc. ( email )

San Francisco, CA 94158

Chiwei Yan

Uber Technologies, Inc. ( email )

San Francisco, CA 94158
United States

HOME PAGE: http://web.mit.edu/chiwei/www

Helin Zhu

Uber Technologies, Inc. ( email )

San Francisco, CA 94158

Register to save articles to
your library

Register

Paper statistics

Downloads
724
Abstract Views
3,112
rank
34,225
PlumX Metrics