Modelling driver's reactive strategies in e-hailing platforms: an agent-based simulation model and an approximate analytical model

For an e-hailing taxi operation, we analyse a driver's profit-maximising reactive strategy (to either accept or refuse a ride request) in response to the ride request broadcast by the platform. We analyse four operating modes, each of which is a combination of either of two reactive strategies: no refusal and refusal based on proximity, and either of two broadcasting methods. In an operating mode, our objective is to evaluate the expected total profit in a shift. We adopt a two-stage methodology to answer the research questions. In the first stage, we develop an agent-based simulation model to capture the effect of multiple taxis on driver's reactive strategy. Using real trip data, we find that a driver could follow a strategy of refusal based on proximity and earn approximately 25% more than the baseline no refusal strategy. In the second stage, we develop an approximate analytical model for a single taxi operation and compare the performance against the agent-based simulation model. We develop closed-form expressions of the expected total profit for each operating mode and topology of the service region. We find that our approximate analytical model provides an upper bound, and the profit deviation lies within 20% of the agent-based simulation model.