Truthful mechanisms to maximize the social welfare in real-time ride-sharing

Abstract

Ride-sharing contributes significantly to lowering trip expenses, easing traffic congestion and decreasing air pollution. However, current order pairing approaches in ride-sharing usually focus on minimizing total trip distances or maximizing platform profits, overlooking the drivers’ desire for increased earnings. As a result, drivers might provide dishonest information to gain higher profits, leading to inefficient order pairing for the ride-sharing platform and potential losses for both the platform and drivers. In this paper, we address this challenging issue by developing efficient order pairing mechanisms that maximize the social welfare of the platform and drivers. Specifically, we introduce two truthful auction-based order pairing mechanisms, SWMOM-VCG and SWMOM-GM, where drivers bid on platform-published orders to complete them and earn profits. We provide theoretical proof that both mechanisms fulfill the criteria of individual rationality, profitability, truthfulness and so on. Using real taxi order data from New York City, we assess the performance of both mechanisms and show that they achieve greater social welfare compared to existing methods. Additionally, we find that SWMOM-GM requires less computation time than SWMOM-VCG for order pairing, with only a minor reduction in social welfare.