MobLab
Instructions
Aa

# Rideshare

## The Market

• There are a number of potential drivers for a rideshare service. Each day:
• First, each driver simultaneously decides whether to drive
• Then, the day’s revenue per-hour driven announced to all
• The more drivers, the lower the revenue per hour
• Finally, each of those driving chooses how many hours to drive
• Those not driving can calculate what their profits would have been

## How to Play

• Use the profit calculator to predict whether driving will be profitable
• As you change the predicted number of drivers, revenue per hour changes
• For a given revenue per hour, you see how profit varies with hours driven
• Choose whether to drive
• When all have chosen, revenue per hour driven announced
• Drive=Yes: choose how many hours to drive
• Drive=No: check whether driving would have been profitable

## Payoff Computation

• Drive=No: Payoff=0 for the day
• Drive=Yes: Payoff= Revenue - Fixed Cost - Variable Costs
• Revenue: Revenue per hour × hours driven
• Fixed Cost: If you choose to drive, you pay this cost.
• Variable Cost: Each hour you drive is costly. Variable costs are the sum of marginal costs for hours driven.

## Example

• Fixed Cost equals \$64
• Marginal Costs
• First hour: \$1
• Second hour: \$3
• Third hour: \$5
• Fourth hour: \$7
• Fifth hour: \$9
• Sixth hour: \$11
• You drive 5 hours when revenue per hour is \$10
• Revenues Fixed Cost Variable Costs = Profit
(5 × \$10) \$64 (\$1 + \$3 + \$5 + \$7 +\$9) = -\$39