# Optimal Passenger-Seeking Policies on E-hailing Platforms Using Markov Decision Process and Imitation Learning

## TL;DR

This paper develops an MDP-based model combined with imitation learning to optimize passenger-seeking policies for e-hailing drivers, significantly improving their efficiency and reducing unnecessary travel.

## Contribution

It introduces a novel MDP framework tailored for e-hailing drivers' repositioning, incorporating new features and a dynamic adjustment strategy for better modeling competition.

## Key findings

- Achieves 17.5% improvement over baseline hotspot strategy
- Uses real Didi driver trajectories for model training
- Validates model effectiveness through Monte Carlo simulation

## Abstract

Vacant taxi drivers' passenger seeking process in a road network generates additional vehicle miles traveled, adding congestion and pollution into the road network and the environment. This paper aims to employ a Markov Decision Process (MDP) to model idle e-hailing drivers' optimal sequential decisions in passenger-seeking. Transportation network companies (TNC) or e-hailing (e.g., Didi, Uber) drivers exhibit different behaviors from traditional taxi drivers because e-hailing drivers do not need to actually search for passengers. Instead, they reposition themselves so that the matching platform can match a passenger. Accordingly, we incorporate e-hailing drivers' new features into our MDP model. The reward function used in the MDP model is uncovered by leveraging an inverse reinforcement learning technique. We then use 44,160 Didi drivers' 3-day trajectories to train the model. To validate the effectiveness of the model, a Monte Carlo simulation is conducted to simulate the performance of drivers under the guidance of the optimal policy, which is then compared with the performance of drivers following one baseline heuristic, namely, the local hotspot strategy. The results show that our model is able to achieve a 17.5% improvement over the local hotspot strategy in terms of the rate of return. The proposed MDP model captures the supply-demand ratio considering the fact that the number of drivers in this study is sufficiently large and thus the number of unmatched orders is assumed to be negligible. To better incorporate the competition among multiple drivers into the model, we have also devised and calibrated a dynamic adjustment strategy of the order matching probability.