Anomalous supply shortages from dynamic pricing in on-demand mobility
Abstract
Dynamic pricing schemes are increasingly employed across industries to maintain a self-organized balance of demand and supply. However, throughout complex dynamical systems, unintended collective states exist that may compromise their function. Here we reveal how dynamic pricing may induce demand-supply imbalances instead of preventing them. Combining game theory and time series analysis of dynamic pricing data from on-demand ride-hailing services, we explain this apparent contradiction. We derive a phase diagram demonstrating how and under which conditions dynamic pricing incentivizes collective action of ride-hailing drivers to induce anomalous supply shortages. By disentangling different timescales in price time series of ride-hailing services at 137 locations across the globe, we identify characteristic patterns in the price dynamics reflecting these anomalous supply shortages. Our results provide systemic insights for the regulation of dynamic pricing, in particular in publicly accessible mobility systems, by unraveling under which conditions dynamic pricing schemes promote anomalous supply shortages.
Keywords
Cite
@article{arxiv.2003.07736,
title = {Anomalous supply shortages from dynamic pricing in on-demand mobility},
author = {Malte Schröder and David-Maximilian Storch and Philip Marszal and Marc Timme},
journal= {arXiv preprint arXiv:2003.07736},
year = {2021}
}
Comments
Main manuscript is 21 pages (incl. methods) with 4 figures. Appendix contains detailed description of the data and methods and additional examples