Pricing Shared Rides

The goal of shared rides is to transport compatible riders together in a carpool-type service, thereby reducing vehicle miles and emissions. However, platforms such as Uber and Lyft have long struggled to maintain a healthy shared rides product. Low prices are needed to attract riders and achieve enough density for efficient matching, but are risky for platforms. We analyze this tension in status-quo pricing policies used by platforms, and propose a new pricing policy that encourages matches and improves efficiency.