A Surge-type Pricing in Ridesharing Systems is Stability Optimal

ABSTRACT: The availability of drivers at a certain location affects the waiting time of passengers that arrive to be served by the platform. We introduce a queueing model for this waiting time and consider the effect on stability of available drivers’ mobility pattern, their willingness to accept rides in a given location, and the incentives offered by the platform. For any fixed number of drivers, we characterize the largest set of passenger arrival rates which can result to stable queues under some policy dictating the movement of available drivers and their acceptance of rides. It turns out that any such policy can be enforced by offering appropriate region-dependent rewards to drivers for passenger pick up. Next, we show that dynamic rewards which are proportional to the passenger queue lengths, have the property of stabilizing queues for any arrival rates within the stability region. Seen from the perspective of drivers, such rewards which resemble surge pricing maximize their utilization.

BIO: Prof. Costas A Courcoubetis was born in Athens, Greece and received his Diploma (1977) from the National Technical University of Athens, Greece, in Electrical and Mechanical Engineering, his MS (1980) and PhD (1982) from the University of California, Berkeley, in Electrical Engineering and Computer Science. He was MTS at the Mathematics Research Center, Bell Laboratories, Professor in the Computer Science Department at the University of Crete, Professor in the Department of Informatics at the Athens University of Economics and Business, and Professor in the ESD Pillar, Singapore University of Technology and Design where he heads the Initiative for the Sharing Economy and co-directs the new ST-SUTD Center for Smart Systems. His current research interests are economics and performance analysis of networks and internet technologies, sharing economy, regulation policy, smart grids and energy systems, resource sharing and auctions. Besides leading in the past a large number of research projects in these areas he has also published over 100 papers in scientific journals such as Operations Research, Mathematics of Operations Research, Journal on Applied Probability, ToN, IEEE Transactions in Communications, IEEE JSAC, SIAM Journal on Computing, etc. and in conferences such as FOCS, STOC, LICS, INFOCOM. GLOBCOM, ITC, ACM SIGMETRICS. His work has over 13,000 citations according to the Google Scholar. He is co-author with Richard Weber of “Pricing Communication Networks: Economics, Technology and Modeling” (Wiley, 2003).

Hosted by: Paul Bogdan