A Profit-Aware Negotiation Mechanism for On-Demand Transport Services

Abstract. As new markets for transportion arise, on-demand trans-port services are set to grow as more passengers seek affordable per-sonalized journeys. To reduce passenger prices and increase provider revenue, these journeys will often be shared with other passengers. As such, new negotiation mechanisms between passengers and the service provider are required to plan and price journeys. In this pa-per, we propose a novel profit-aware negotiation mechanism: a multi-agent approach that accounts for both passenger and service provider preferences. Our negotiation mechanism prices each passenger’s journey, in addition to providing vehicle routing and scheduling. We prove a stability property of our negotiation mechanism using a con-nection to hedonic games. This connection yields new insights into the link between vehicle routing and passenger pricing. We also show via simulations the dependence of the service provider profit and pas-senger prices on the number of passengers as well as passenger de-mographics. In particular, our key observation is that increasing the number of passengers has the effect of increasing passenger diversity, which in turn increases the service provider’s profit.