Integrating Behavior, Economics, and Operations in Urban Mobility: Ridesharing and Multi-Modal Travel

In today’s urban mobility marketplaces, both operational policies (e.g., matching, routing) and economic mechanisms (e.g., pricing, incentives) affect perceptions of Quality of Service (QoS) and users’ mobility choices. These, in turn, affect both operational objectives (e.g., utilization, vehicle-miles travelled) and economic objectives (e.g., profit, welfare). We study these complex interactions between behavior, economics, and operations in two settings. First, in commercial ridesharing, we study the problem of pricing exclusive vs. shared service to maximize profit, while incorporating QoS guarantees (motivated by recent field experiments that highlight the importance of proactively compensating users when they experience frustrations during service). We introduce a dynamic notion of QoS, called sequential individual rationality, that captures users’ behavior-driven responses to the sequence of utilities experienced during the successive stages of a shared ride, as subsequent users join the ride. The analysis of QoS-sensitive profit not only yields the optimal QoS-aware pricing policy, but also reveals key operational insights, such as an elegant spatial characterization of optimal “shareable regions”. Our framework is general and can be, for example, adapted to the peer-to-peer carpooling context, where the problem involves finding QoS-aware, fair cost sharing schemes. (This part of the talk is based on joint work with Theja Tulabandhula and Koyel Mukherjee.)

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