A network ridesharing experiment with sequential choice of transportation mode

Within the last decade, there has been a dramatic bloom in ridesharing businesses along with the emergence of new enabling technologies. A central issue in ridesharing, which is also important in the general domain of cost-sharing in economics and computer science, is that the sharing of cost implie...

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Bibliographic Details
Published in:Theory and decision 2018-10, Vol.85 (3-4), p.407-433
Main Authors: Mak, Vincent, Seale, Darryl A., Gisches, Eyran J., Rapoport, Amnon, Cheng, Meng, Moon, Myounghee, Yang, Rui
Format: Article
Language:English
Subjects:
Behavioral/Experimental Economics
Car pools
Computer science
Convergence
Coordination
Cost sharing
Economic models
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Externality
Finance
Game Theory
Insurance
Management
Observability (systems)
Operations Research/Decision Theory
Social and Behav. Sciences
Statistics for Business
Transportation
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Summary:Within the last decade, there has been a dramatic bloom in ridesharing businesses along with the emergence of new enabling technologies. A central issue in ridesharing, which is also important in the general domain of cost-sharing in economics and computer science, is that the sharing of cost implies positive externalities and hence coordination problems for the network users. We investigate these problems experimentally in the present study. In particular, we focus on how sequential observability of transportation mode choices can be a powerful facilitator of coordination in ridesharing. Our study abstracts the essential issues of coordination in ridesharing into a directed network game with experimentally testable predictions. In line with the theoretical analysis, our experimental evidence shows that even a limited extent of sequential choice observability might lead to efficient coordination. However, convergence to efficiency is slower with more limited observability, resulting in a significant increase in travel cost.
ISSN:0040-5833
1573-7187
DOI:10.1007/s11238-018-9663-y