A network ridesharing experiment with sequential choice of transportation mode

Abstract

Within the last decade, there has been a dramatic bloom in ridesharing businesses along with the emergence of new enabling technologies. A central issue in ridesharing, which is also important in the general domain of cost-sharing in economics and computer science, is that the sharing of cost implies positive externalities and hence coordination problems for the network users. We investigate these problems experimentally in the present study. In particular, we focus on how sequential observability of transportation mode choices can be a powerful facilitator of coordination in ridesharing. Our study abstracts the essential issues of coordination in ridesharing into a directed network game with experimentally testable predictions. In line with the theoretical analysis, our experimental evidence shows that even a limited extent of sequential choice observability might lead to efficient coordination. However, convergence to efficiency is slower with more limited observability, resulting in a significant increase in travel cost.

Appendix

1.1 Subject instructions

Welcome to an experiment on cost sharing. During the present experimental session, you will be asked to make a large number of decisions and so will the other participants. Your decisions, as well as the decisions of the other participants, will determine your monetary payoff according to a procedure that will be explained below.

Please read the instructions carefully. If at any time during the session you have questions, please raise your hand and one of the experimenters will come to assist you. You may refer to the instructions during any time in the session.

Please note that from now on all communication between the participants is prohibited. If the participants communicate with one another in any shape or form, the session will be terminated. Please note, too, that the experiment is self-paced. Therefore, you may anticipate short delays while other participants in your group determine and then type in their decisions.

1.2 Description of the task

Consider yourself to be one of 10 commuters, each owning a car. In this experiment, you will be asked to participate in a task that simulates the decisions commuters often face in choosing among alternative modes of transportation between a given origin (say, a convention center) and a given destination (say, a restaurant for the conference dinner). The game consists of many identical rounds. Each round is described as follows.

The commuters (hereafter called “players”) will be asked to make their decisions one by one following an order which is pre-determined randomly by the computer. Each player has to choose one of three alternatives:

• O → D: Drive your car by yourself from the origin (denoted by the letter O) to the destination (denoted by the letter D). The cost for traveling by yourself in your own car is $20.00

• O → CP → D: Drive your car from the origin to a nearby carpool lot, park your car, and then travel with the carpool to your destination. You pay $10.00 for parking your car. In addition, the cost charged by the carpool is $70.00, which is divided equally by the number of players who choose the carpool. The capacity of the carpool is 10. In other words, you share equally the cost of public transportation. Thus, your travel cost from O to D through route O → CP → D is

  $$ \$ 10 + \frac{\$ 70}{{{\mathbf{m}}({\mathbf{CP}} \to {\mathbf{D}}) }}, $$

  where m(CP → D) is the number of players who share the carpool.

• O → SH → D: Drive your car from the origin to a shuttle station, park your car, and travel with the shuttle to your destination. There is no charge for parking your car in the shuttle station. The total cost of the shuttle is $150.00, which is divided equally by the number of players riding the shuttle. The capacity of the shuttle is 10. Thus, your travel cost from O to D through route O → SH → D is

  $$ \frac{\$ 150}{{{\mathbf{m}}({\mathbf{SH}} \to {\mathbf{D}}) }}, $$

  where m(SH → D) is the number of players who share the ride by the shuttle.

This is a sequential game in which players make their decisions one by one. Each player will be assigned a different position in the sequence (from 1 to 10) at the beginning of each round. Then, each player will be asked to choose one of the three alternatives when it is her turn to play. Moreover, before confirming her choice, she will be informed of the choice of the last player who preceded her in the sequence. The game will be iterated for 50 rounds; they only differ from each other in the assignment of the positions.

1.3 Experimental procedure

At the beginning of each round, each of the ten players will be presented with the following diagram. A message window will pop up to indicate the round number and your position in the sequence of choosing the mode of transportation. The position of each player in the sequence will randomly be assigned by the computer, and in general will change from one round to another. During the experiment, each player will be assigned any given position the same number of times.

Please study the main screen above.

The upper part of the screen is a sketch map of the traffic system. There are 10 cars parked in the origin; each is exhibited as a solid circle. When it is her turn to play, each player can either drive to the destination D (up arrow) and pay $20.00, drive to the carpool station (right arrow), park her car, and then take the carpool for a total cost of $10 + $70/m(CP → D), or drive to the shuttle station (left arrow), park her car (for free), and then take the shuttle for a total cost of $150/m(SH → D).

On the screen, grey solid circles represent players who are waiting to be called to make their decision. Green solid circles represent players who have already made their decisions. And the single red solid circle represents each player’s current position. After each player makes her decision, her red solid circle will turn to green. The middle of the screen shows a status bar (in yellow) that indicates the progress of the experiment. It tells you how many rounds have been completed and the total number of rounds.

In the lower part of the screen there are two tables. The top table on the right, labeled infor, shows the group size (which is 10) and your position in the sequence. The bottom table is where you make your decision. Use the mouse to choose one of the three options. If you change your mind, please choose another option. Your decision will not register until you press the Confirm button (lower right). The left part of the lower screen, labeled Condition, tells you if you have any information about the decisions of the other players. Here it says Partial Information, meaning that the decision of the last player who preceded you in the sequence is displayed.

Once all the ten players type in their decisions and confirm them, a new screen will pop up to display the outcome of the round. This screen shows the number of players who have chosen each of three routes, the cost associated with each decision, your decision, your cost for the round, and your payoff in points. See an example in screen below.

Please study the outcome screen below.

After clicking the “Click here to play the next round” at the bottom of this screen, a window will pop up instructing the player to wait for all the players to review the outcome of the round. Then, a new round will start. The game will be repeated in this way for 50 rounds. The only difference from one round to another is in the order of the players that are assigned randomly by the computer.

1.3.1 How will you be paid?

When all the 50 rounds have been completed, the computer will choose randomly 5 payoff rounds for each player. Payoff of each round will then be converted into US dollars at the rate:

$$ {\text{Payoff}} = \frac{\$ 90}{\text{cost}}. $$

For example, if your cost in a chosen round is $20, your payoff in that round will be $(90/20) = $4.5. Your final payoff will be the sum of the payoffs from the 5 randomly selected rounds. In addition, you will be paid $5.00 for your participation in the experiment. The experimenter will come up to your cubicle and write your total payoff on your receipt. You will complete the receipt, sign it up, and then be paid cash by one of the experimenters.

Please place the instructions on the table in front of you to indicate that you have completed reading them. The experiment will begin shortly. Please remember that no communication is allowed during the experiment. If you encounter any difficulties please raise your hand and you will be responded to by the experimenter.

Thank you!