Matching Supply and Demand in Peer-to-Peer Transportation Platforms

Peer-to-peer transportation platforms dynamically match requests (e.g., a ride, a delivery) to independent suppliers who are not employed nor controlled by the platform. Thus, the platform cannot be certain that a supplier will accept an offered request. To mitigate this selection uncertainty, a platform can offer each supplier a menu of requests to choose from. However, such menus need to be created carefully because there is a trade-off between selection probability and duplicate selections. In addition to a complex decision space, supplier selection decisions are vast and have systematic implications, impacting the platform’s revenue, other suppliers’ experiences (in the form of duplicate selections) and the request waiting times. Thus, we present a stochastic optimization. Extensive computational results using the Chicago Region as a case study illustrate that our method outperforms a set of benchmark policies. Our method leads to more balanced assignments by sacrificing some easy wins towards better system performance over time and for all stakeholders involved, including increased revenue for the platform, and decreased match waiting times for suppliers and requests.