Rethinking Ride-Pooling Pricing for Better Travel

Ride-pooling is like carpooling but with a modern twist. Imagine you need a lift to a coffee shop. Instead of calling a regular taxi, you join others on a shared ride, making it a bit longer but cheaper. Sounds good, right? The catch is that you might have to wait for others to get picked up or dropped off, which can be annoying. Since you're sharing the ride, you get a discount on your fare, but how fair is that discount?

Most researchers have looked at simple discounts: either everyone gets the same break, or occasionally, the discount is related to how much inconvenience you feel. What if there’s a better way to figure out the pricing that makes everyone happy? Well, we're talking about a new way of setting fares based on how much each traveller values their time and how willing they are to share the ride.

#The Balancing Act

In our ride-pooling system, we need to think about three main groups: the travellers, the system itself, and the ride operator. For travellers, sharing rides can feel cramped and slow, which is no one’s dream commute. This discomfort is often reflected in how much they value their time and how much they dislike sharing with strangers.

From the system's side, the idea is to reduce traffic and pollution by getting more people into fewer cars. After all, fewer cars can mean less honking and less time in gridlock. But for the Operators-those who actually run the ride-pooling service-the bottom line matters. They want to make money while keeping customers happy, which can feel like a high-wire act without a net.

It turns out, if we tailor the fares to individual preferences, we can make both the operator happy and reduce the discomfort for travellers. This means that if some travellers are more easy-going about sharing rides, they could get a better deal compared to those who are less flexible.

#Setting Individual Fares

So, how do we come up with these personalized fares? The idea is to analyze a group of travellers, each with different levels of comfort and preferences. If someone hates sharing but really needs to save money, they probably won’t be happy to join a crowded car. Meanwhile, another traveller might be fine with sharing if it means getting a cheaper ride.

In our model, we propose an individualized pricing strategy. This means that each ride is priced based on the specific needs and expectations of the people sharing it. If you hate waiting and would rather pay a bit more to get to your destination quickly, your fare might be a little higher. On the other hand, if you’re okay with a longer ride to save some cash, your fare would be lower.

#The Power of Choice

In addition to making the fares fairer, this approach helps operators find the right balance. With Personalized Pricing, they can be more profitable by charging those who are less willing to share at a higher rate while offering discounts to those who are more inclined to share. This strategy rewards good behaviour and encourages more people to join the ride-pooling service without feeling cheated.

To make this work, we set up an experiment in busy New York City, a place where ride-sharing is not just popular but often chaotic. Our findings show that when we personalize the prices, we can actually save on miles driven and increase profits. In simpler terms, we can help the planet and the operator's wallet at the same time.

#The Three Parties in Ride-Pooling: Travelers, the System, and Operators

Now that we know what ride-pooling is all about, let’s take a closer look at our three main players.

#The Travelers

When it comes to the travellers, sharing rides can be like sharing a pizza. It sounds good on paper, but nobody wants to sit with someone who hogs the toppings. Travellers experience discomfort because the ride can take longer and detours can feel annoying. Some people are pretty particular about their time and space. This is where the idea of value-of-time comes in. Every minute counts, especially in a bustling city.

#The System

From a broader perspective, ride-pooling can help reduce traffic and pollution. If we can get a bunch of people going in the same direction, we can cut down the number of cars on the road. This in turn can lead to a cleaner environment and less congestion overall. However, not many operators see this as a financial incentive. They are more concerned about how many rides they can sell and whether they can keep the service running profitably.

#The Operators

Now, let’s talk about the operators. They are the ones who keep the wheels turning. For them, it's all about money. To keep the ride-pooling service alive, they need to make enough cash while attracting enough customers. That means they have to play a tricky game of satisfying both the budget-conscious traveller and their bottom line.

#The Pricing Model: How It Works

We created a personalized pricing model that considers these three perspectives, ensuring everything works in harmony.

#Step 1: Collecting Trip Requests

We start by gathering trip requests from potential travellers. This helps us understand who is using the service and what they really want. Do they want to go from A to B quickly, or are they more flexible with their time?

#Step 2: Understanding Behavioural Traits

Next, we look into the different preferences. Are there people who are really picky about sharing? Are there those who just want the cheapest ride possible? By understanding these traits, we can tailor our ride offers better.

#Step 3: Constructing the Shareability Graph

We then build what we call a shareability graph. This graph helps us see which rides can be pooled together based on the travellers' preferences. In essence, it’s like a matchmaking service for rides. It checks who can share with whom and under what terms.

#Step 4: Setting Acceptance Probabilities

With our shareability graph in hand, we can determine the likelihood that travellers will accept different offers. This helps us to ensure that the proposed shared rides are appealing enough.

#Step 5: Optimizing Fares

Finally, we set fares that maximize earnings while keeping travellers happy. The goal is to find that sweet spot where everyone feels good about their ride.

#Testing in New York City

Now it’s time for the big test. We decided to pilot our personalized pricing model in New York City. This is a bustling place where ride-sharing is in high demand. We looked at how our system performed compared to more traditional flat-discount methods.

#Results

The results were pretty impressive. Our personalized pricing resulted in fewer miles driven and more profits per mile. This means that not only could we help the environment by reducing unnecessary driving, but we could also help the operators make more money.

#The Competitive Edge of Personalized Pricing

One of the biggest takeaways from our research is that personalization gives ride-pooling services a competitive edge. As more people seek out cost-effective travel options, being able to offer a more tailored experience can make all the difference.

#Travel Discounts That Work

Instead of giving everyone the same discount-which often ends up being too little to motivate them to share-personalized pricing ensures that those who stand to gain the most from pooling get the best deals. This leads to increased satisfaction, and happy travellers are much more likely to use the service again.

#Saving the Planet, One Ride at a Time

By optimizing rides for shareability and efficiency, we’re also helping to save the planet. Fewer cars on the road mean less congestion and pollutants in the air. It's a win-win situation for everyone involved: the traveller gets a better experience, the system benefits from reduced emissions, and operators enjoy better profits.

#Conclusion: The Future of Ride-Pooling

In summary, ride-pooling doesn’t just have to be about sharing a ride; it can be a smart, economical choice for both travellers and operators. By personalizing fares based on individual preferences, we can create a more enjoyable and sustainable travel experience.

As public transport Systems and ride-sharing services continue to evolve, the focus on personalization will only grow stronger. By keeping the interconnected needs of travellers, systems, and operators in mind, we can pave the way for a more efficient, happier journey for all.

So next time you hop into a shared ride, remember that you are part of a larger effort to make commuting a little greener, a lot more fun, and just a bit more personal!