Flexible, Eco-Friendly and Profitable Car Sharing Contracts: An Investigation into consumers’ behavior

Abstract

Recently car sharing companies have grown across the United States. Members of these companies, when faced upon the decision on the amount of time to rent a car for, do not always make rational decisions. This behavior negatively affects both the customers and the company as if customers reserve a car for the wrong amount of time, they might either return it early and pay for extra time that they do not need, or they might return it late and incur a penalty fee. When this happens, the company needs to find a way to satisfy other customers’ that might have been displaced. This research paper therefore aims at analyzing customers’ behaviors and understanding which variables affect customers’ decisions when reserving a car. Through a random effects logistic regression analysis, data was analyzed to understand which variables influence a late return. Results showed that the two variables playing the most critical roles in the percent change of late returns are the time of the day and whether or not a customer had to pay a penalty on their previous rental.