Learning to price vehicle service with unknown demand

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

It can be profitable for vehicle service providers to set service prices based on users' travel demand on different origin-destination pairs. 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)1/2D-1/4), which decays to zero as D approaches infinity.

Original languageEnglish (US)
Title of host publicationMobiHoc 2020 - Proceedings of the 2020 International Symposium on Theory, Algorithmic Foundations, and Protocol Design for Mobile Networks and Mobile Computing
PublisherAssociation for Computing Machinery
Pages161-170
Number of pages10
ISBN (Electronic)9781450380157
DOIs
StatePublished - Oct 11 2020
Event21st ACM International Symposium on Mobile Ad Hoc Networking and Computing, MobiHoc 2020 - Virtual, Online, United States
Duration: Oct 11 2020Oct 14 2020

Publication series

NameProceedings of the International Symposium on Mobile Ad Hoc Networking and Computing (MobiHoc)

Conference

Conference21st ACM International Symposium on Mobile Ad Hoc Networking and Computing, MobiHoc 2020
Country/TerritoryUnited States
CityVirtual, Online
Period10/11/2010/14/20

Keywords

  • exploration and exploitation
  • flow balance
  • pricing with unknown demand
  • spatial pricing
  • vehicle service

ASJC Scopus subject areas

  • Hardware and Architecture
  • Computer Networks and Communications
  • Software

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