Using bilateral trading to increase ridership and user permanence in ridesharing systems

One of the main obstacles that has challenged peer-to-peer (P2P) ridesharing systems in operating as stand-alone systems is reaching a critical mass of participants. Toward this goal, we propose what we call the P2P ride exchange mechanism to increase matching rate and customer retention in a ridesharing system. This mechanism gives riders the opportunity to purchase other riders' itineraries while it provides suitable alternative rides to the sellers, thus increasing the service rate in a ridesharing system. The proposed mechanism aims to maximize expected user surplus, is robust towards selfish user manipulation, and has very low information requirements. Using numerical experiments, we demonstrate what type of ridesharing systems can benefit the most from P2P ride exchange. Furthermore, we study the impact of customer flexibility on the rate of exchange. If implemented properly, P2P ride exchange can effectively increase the number of served riders and enhance customer loyalty by engaging customers in the ride-matching process.