Gender-Based Operational Issues Arising From On-Demand Ride-Hailing Platforms: Safety Concerns and System Configuration

Abstract

Problem definition: A critical problem associated with ride-hailing platforms is safety for female users (riders and drivers). One way to resolve or at least alleviate this problem is to migrate from the commonly adopted gender-neutral "pooling" system that matches riders with drivers without considering gender to a "hybrid" system with a female-only option. Will switching to a hybrid system result in a win-win outcome for all parties (riders, drivers and the platform)? If the current pooling system is kept, how shall platforms work on the user safety to improve their performance? With a hybrid system, female riders would have the flexibility to choose between the pooling and female-only option. Taking into consideration the limited supply of female drivers, should such flexibility also be granted to female drivers? Academic/Practical Relevance: In this paper, we make an initial examination of how female users' safety concerns affect the system configuration of ride-hailing platforms. Methodology: A game-theoretical analysis is used to investigate the performance of two operational systems: a pure pooling system and a hybrid system. For each system, we analyze a two-stage queueing game by first determining the respective equilibrium "joining" and "participating" behaviors of riders and drivers, and then deriving the platform's optimal pricing and wage decisions. Results: First, we show that in a pooling system, the marginal improvement in the platform's profit increases with the safety confidence on the rider demand side but diminishes with the safety confidence on the driver supply side. Therefore, platforms should improve female riders' safety confidence as much as possible while ensuring that female drivers' safety confidence is sufficiently high. Interestingly, we demonstrate that increasing driver safety confidence may not lead to more female riders joining the pooling system. We find that in a hybrid system, flexibility should not be fully granted to female drivers because it can jeopardize the efficiency of the system. A comparison of the equilibrium outcomes associated with pooling and hybrid systems reveals that when safety-concerned female users' safety confidence falls to certain levels, switching from a pooling system to a hybrid system can result in a win-win outcome on the two most important goals, increasing the accessibility for safety-concerned female users and improving the platform's profitability, although male and safety-unconcerned female users might be worse off. Managerial Implications: Our results shed light on platforms' operational system design, that is, on which side the platform should put more effort into enhancing safety confidence in a pooling system, when to switch to a hybrid system and to what extent the platform should grant female drivers flexibility to choose in a hybrid system. Our analysis also provides a plausible explanation for the adoption of different systems in countries with differing levels of female safety.