Learning to Price Vehicle Service with Unknown Demand

07/07/2020
by   Haoran Yu, et al.
0

It can be profitable for vehicle service providers to set service prices based on users' travel demand on different origin-destination pairs. The prior studies on the spatial pricing of vehicle service rely on the assumption that providers know users' demand. In this paper, we study a monopolistic provider who initially does not know users' demand and needs to learn it over time by observing the users' responses to the service prices. We design a pricing and vehicle supply policy, considering the tradeoff between exploration (i.e., learning the demand) and exploitation (i.e., maximizing the provider's short-term payoff). Considering that the provider needs to ensure the vehicle flow balance at each location, its pricing and supply decisions for different origin-destination pairs are tightly coupled. This makes it challenging to theoretically analyze the performance of our policy. We analyze the gap between the provider's expected time-average payoffs under our policy and a clairvoyant policy, which makes decisions based on complete information of the demand. We prove that after running our policy for D days, the loss in the expected time-average payoff can be at most O((ln D)^0.5 D^(-0.25)), which decays to zero as D approaches infinity.

READ FULL TEXT
POST COMMENT

Comments

There are no comments yet.

Authors

page 3

page 4

page 5

page 6

page 7

page 8

page 9

page 11

02/06/2019

Analyzing Location-Based Advertising for Vehicle Service Providers Using Effective Resistances

Vehicle service providers can display commercial ads in their vehicles b...
12/05/2017

Robust toll pricing: A novel approach

We study a robust toll pricing problem where toll setters and users have...
04/06/2018

Peeking the Impact of Points of Interests on Didi

Recently, the online car-hailing service, Didi, has emerged as a leader ...
06/06/2016

Assisted Energy Management in Smart Microgrids

Demand response provides utilities with a mechanism to share with end us...
03/14/2021

Competition among Ride Service Providers with Autonomous Vehicles

Autonomous vehicles (AVs) are attractive for ride service providers (RSP...
08/26/2021

Calculating Cost Distributions of a Multiservice Loss System

Congestion pricing has received lots of attention in scientific discussi...
05/30/2019

Heterogeneity in demand and optimal price conditioning for local rail transport

This paper describes the results of research project on optimal pricing ...
This week in AI

Get the week's most popular data science and artificial intelligence research sent straight to your inbox every Saturday.