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Table of Contents
1 Introduction
1.1 Contributions
1.2 Related Work
2 Model, driver earnings, and platform objective
2.1 Model primitives
2.1.1 Single-state model
2.1.2 Dynamic model with surge pricing
2.2 Driver strategies and earnings
Summary
Ride-hailing marketplaces like Uber and Lyft use dynamic pricing, often called surge, to balance the supply of available drivers with the demand for rides. The document discusses driver-side payment mechanisms for such marketplaces, focusing on the design of Uber's new additive driver surge mechanism. It presents a dynamic stochastic model to analyze the impact of surge pricing on driver earnings and their strategies. The study shows that additive surge is more incentive compatible in practice compared to multiplicative surge. The work also acknowledges contributions from various individuals and institutions that supported the research.