Getting Out of Your Own Way: Introducing Autonomous Vehicles on a Ride-Hailing Platform.

The article focuses on the strategic challenges faced by ride-hailing platforms operating a mixed fleet of autonomous vehicles (AVs) and human drivers. Using a game-theoretic model, it reveals that increasing wages for human drivers can paradoxically reduce their participation because higher wages prompt the platform to acquire more AVs, intensifying competition and lowering drivers' matching rates. Extending the model to allow a second-stage AV acquisition after observing human participation, the study finds that this added flexibility can harm the platform's profits by triggering a "race to the top" of escalating wages and AV acquisition, limiting human driver recruitment and reducing overall profitability by over 38% in some cases. The findings underscore the complex interplay between wage setting, AV deployment, and human driver behavior, highlighting the importance for platforms to carefully manage these dynamics to avoid costly outcomes during the transition to autonomous ride-hailing services.