Budget-balanced and strategy-proof auctions for multi-passenger ridesharing

TL;DR

This paper introduces and analyzes the Weighted Minimum Surplus auction and a budget-balanced VCG-based mechanism for multi-passenger ridesharing, ensuring strategy-proofness and budget balance with promising experimental results.

Contribution

It presents novel auction mechanisms for dynamic ridesharing that are both strategy-proof and budget-balanced, addressing key economic challenges in the field.

Findings

Lower bounds for surplus welfare and profit under the WMS auction.

Experimental results show promising performance of both mechanisms.

Analysis under downward closed alternatives assumptions.

Abstract

Ridesharing and ridesourcing services have become widespread, and pricing the rides is a crucial problem for these systems. We propose and analyze a budget-balanced and strategy-proof auction, the Weighted Minimum Surplus (WMS) auction, for the dynamic ridesharing problem with multiple passengers per ride. Under the assumption of downward closed alternatives, we obtain lower bounds for the surplus welfare and surplus profit of the WMS auction. We also propose and analyze a budget-balanced version of the well-known VCG mechanism, the $\mathrm{VCG}_s$. Encouraging experimental results were obtained for both the WMS auction and the $\mathrm{VCG}_s$.