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. We identify characteristic patterns in the price dynamics reflecting these supply anomalies by disentangling different timescal

SUBMITTER: Schroder M 

PROVIDER: S-EPMC7515901 | biostudies-literature | 2020 Sep

REPOSITORIES: biostudies-literature