Dynamic Car Dispatching and Pricing: Revenue and Fairness for Ridesharing Platforms (2207.06318v1)

Abstract: A major challenge for ridesharing platforms is to guarantee profit and fairness simultaneously, especially in the presence of misaligned incentives of drivers and riders. We focus on the dispatching-pricing problem to maximize the total revenue while keeping both drivers and riders satisfied. We study the computational complexity of the problem, provide a novel two-phased pricing solution with revenue and fairness guarantees, extend it to stochastic settings and develop a dynamic (a.k.a., learning-while-doing) algorithm that actively collects data to learn the demand distribution during the scheduling process. We also conduct extensive experiments to demonstrate the effectiveness of our algorithms.

• The paper proposes a two-phased pricing solution where the first phase maximizes revenue and the second phase adjusts prices to promote fairness.
• It analyzes the computational complexity of the dispatching-pricing problem and extends the approach to stochastic settings with uncertain demand.
• The study presents a dynamic learning algorithm validated by experiments, demonstrating tangible improvements in both revenue and fairness.

The paper "Dynamic Car Dispatching and Pricing: Revenue and Fairness for Ridesharing Platforms" addresses the significant challenge faced by ridesharing platforms in balancing profit with fairness under the conflicting interests of drivers and riders. The primary aim of the paper is to formulate and solve the dispatching-pricing problem in such a way that maximizes total revenue while ensuring the satisfaction of both drivers and riders.

Key Contributions and Findings:

Computational Complexity:

• The authors delve into the computational complexity of the dispatching-pricing problem and establish fundamental insights into the inherent computational challenges. This lays the groundwork for understanding the feasibility and limitations of potential solutions.

Two-Phased Pricing Solution:

• One of the notable contributions of this paper is a novel two-phased pricing strategy. This strategy is designed to provide guarantees on both revenue and fairness. In the first phase, the prices are set to maximize the total revenue. In the second phase, adjustments are made to these prices to ensure a fair distribution of earnings among drivers and acceptable ride costs for passengers.

Extension to Stochastic Settings:

• The paper extends the two-phased approach to stochastic environments where the demand is uncertain. This extension is critical as real-world demand for ridesharing platforms is inherently unpredictable. The stochastic model allows for more robust real-world applications of the proposed solution.

Dynamic Algorithm:

• The authors introduce a dynamic, or learning-while-doing, algorithm. This algorithm is particularly innovative as it actively gathers data about demand distribution in real-time and adapts the dispatching and pricing strategies accordingly. This adaptive learning component is crucial for maintaining an optimal balance between revenue and fairness over time, as demand patterns evolve.

Experimental Validation:

• Extensive experiments are conducted to evaluate the performance of the proposed algorithms. The results demonstrate that their methods not only maximize revenue but also uphold fairness principles. The experiments validate the practical applicability of the algorithm in real-world scenarios and highlight its advantage over traditional methods.

In summary, this paper provides a comprehensive framework for tackling the dispatching and pricing challenges in ridesharing platforms by combining theoretical complexity analysis, novel algorithm design, adaptability to stochastic environments, and robust experimental validation. These contributions significantly advance the state-of-the-art in ensuring both profitability and fairness in ridesharing ecosystems.