Bounded Rationality in Ride-Sourcing Drivers' Dwelling at Transportation Terminals: A Behavioral Queueing Analysis

46 Pages Posted: 29 Jan 2025

See all articles by Tianming Liu

Tianming Liu

University of Michigan at Ann Arbor - Department of Civil and Environmental Engineering

Zhengtian Xu

George Washington University - Department of Civil and Environmental Engineering

Jussi Keppo

National University of Singapore (NUS) - NUS Business School

Yafeng Yin

University of Michigan, Ann Arbor

Hongtu Zhu

University of North Carolina (UNC) at Chapel Hill; University of North Carolina (UNC) at Chapel Hill - Biomedical Research Imaging Center

Date Written: November 27, 2024

Abstract

This paper examines the boundedly rational behavior of ride-sourcing drivers at transportation terminals through the lens of behavioral queueing theory. By integrating behavioral concepts such as mental accounting, risk aversion, and endowment effects, we establish a theoretical model of idle drivers' queueing decisions and formulate hypotheses to identify drivers' bounded rationality. Empirical analysis using a dataset from Tianjin, China reveals that drivers are influenced by sunk costs through mental accounting, leading them to extended waits in the queue. We also find that drivers are risk-averse in the time loss domain and are more likely to leave the queue when they are not sequentially matched, as opposed to being matched in FIFO order. Additionally, service cancellations are found to trigger the endowment effect among drivers, strengthening their willingness to stay in the queue. Our findings highlight the importance of understanding these behavioral factors to improve queue management and operational efficiency in ride-sourcing systems. Policy recommendations include designing incentives for driver relocation to mitigate the driver oversupply induced by the sunk cost effect and limit customers' ability to cancel orders at terminals to counteract the negative effects of service cancellations.

Keywords: Ride-sourcing, Driver behavior, Bounded rationality, Behavioral queueing theory, Supply management

Suggested Citation

Liu, Tianming and Xu, Zhengtian and Keppo, Jussi and Yin, Yafeng and Zhu, Hongtu, Bounded Rationality in Ride-Sourcing Drivers' Dwelling at Transportation Terminals: A Behavioral Queueing Analysis (November 27, 2024). Available at SSRN: https://ssrn.com/abstract=5050040 or http://dx.doi.org/10.2139/ssrn.5050040

Tianming Liu (Contact Author)

University of Michigan at Ann Arbor - Department of Civil and Environmental Engineering ( email )

2350 Hayward Street
2340 GG Brown Building
Ann Arbor, MI 48109-2125
United States

Zhengtian Xu

George Washington University - Department of Civil and Environmental Engineering ( email )

800 22nd Street NW
Washington, DC 200052
United States

Jussi Keppo

National University of Singapore (NUS) - NUS Business School ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

HOME PAGE: http://https://www.jussikeppo.com

Yafeng Yin

University of Michigan, Ann Arbor ( email )

2350
Hayward Street
Ann Arbor, MI 48109
United States

Hongtu Zhu

University of North Carolina (UNC) at Chapel Hill ( email )

102 Ridge Road
Chapel Hill, NC NC 27514
United States

University of North Carolina (UNC) at Chapel Hill - Biomedical Research Imaging Center ( email )

NC
United States

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