Harnessing the Double-Edged Sword via Routing: Information Provision on Ride-Hailing Platforms

32 Pages Posted: 10 Nov 2018

See all articles by Leon Yang Chu

Leon Yang Chu

University of Southern California - Data Sciences and Operations; Cheung Kong Graduate School of Business

Zhixi Wan

The University of Hong Kong - Faculty of Business and Economics

Dongyuan Zhan

UCL School of Management

Date Written: October 1, 2018

Abstract

We consider a ride-hailing platform that provides free information to taxi drivers. Upon receiving a rider’s request, the platform broadcasts the rider’s origin and destination to idle drivers, who accept or ignore the request depending on the profitability considerations. We show that providing such information may reduce drivers’ equilibrium profit. Hence information provision is a double-edged sword: the drivers may choose to take more profitable riders via “strategic idling”. When multiple drivers compete for the same request, how the platform breaks the tie affects the incentives of the drivers. We propose a routing policy that can align the incentives and achieve the first-best outcome for large systems.

Keywords: Ride-Hailing Platform, Queueing Game, Information and Incentive, Routing, Taxi Industry

Suggested Citation

Chu, Leon Yang and Wan, Zhixi and Zhan, Dongyuan, Harnessing the Double-Edged Sword via Routing: Information Provision on Ride-Hailing Platforms (October 1, 2018). NET Institute Working Paper No. 18-04. Available at SSRN: https://ssrn.com/abstract=3266250 or http://dx.doi.org/10.2139/ssrn.3266250

Leon Yang Chu

University of Southern California - Data Sciences and Operations ( email )

701 Exposition Blvd
Los Angeles, CA
United States

Cheung Kong Graduate School of Business ( email )

Oriental Plaza, Tower E3
One East Chang An Avenue
Beijing, 100738
China

Zhixi Wan

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Dongyuan Zhan (Contact Author)

UCL School of Management ( email )

1 Canada Square Level 38
London, E14 5AA
United Kingdom

HOME PAGE: http://https://sites.google.com/site/uclzhan/

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
91
Abstract Views
520
rank
292,329
PlumX Metrics