Fleet Redeployment in Ride-Sharing Economy: An Information Design Approach

An optimal information design is studied for efficient fleet redeployment in ride-sharing market. Inefficiency in form of mismatch between demand and supply could arise where drivers lack of information about market demand. Yet, providing complete public information, such as Uber surge map or Lyft prime time zone, to entire fleet might incur inefficiency as well (Braess 1968). A market designer, who observes both the demand and supply distribution, could send private message to persuade driver and thus induce coordinated relocation actions from the fleet. An ex-post consistency condition requiring the signalled matching likelihood must be equal to the realized distribution, was imposed for credible persuasion. Contrary to the current market practice of monetary incentive for redeployment, we provide a novel information design approach, achieving efficient outcome with strictly lower cost.