Analysis of dynamic decision-making in a bicycle-sharing auction using a dynamic discrete choice model

Abstract

For clarifying the usefulness and practical issues of a tradable permit system empirically, we implemented a tradable permit system for a bicycle-sharing service in Yokohama city, Japan. We analyzed both travel and transaction behavior within this system. Many activity factors, such as the amount of free time in each day, home location and travel mode to the bicycle port, were shown to affect the transaction of tradable permits. The results of the pilot program indicated that inefficient allocation of tradable permits occurred when participants postponed their decision-making because of uncertainty. To determine the reason for this effect and the contributing factors, we created a dynamic discrete choice model to describe the choice results and timing. The estimation result indicated that the option value of postponing decision-making caused the transactions to be performed at the last minute, and that this effect blocked the liquidity of the permits trade. In addition, because the result reveals that there was heterogeneity in the time discount factor, the initial allocation of permits was found to be important for efficient allocation.