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Uber Plans To Kill Surge Pricing With Machine Learning (npr.org)
An anonymous reader writes: Surge pricing is a familiar term for any regular Uber rider -- or driver. It's when you call an Uber, and the price of a ride is two, three, or four times more as a result of greater demand brought on by a sporting event or weather event nearby. For riders, it's an annoyance, but for drivers, it's a perk as it usually results in more pocket change. Inside Uber, surge pricing is considered a market failure, and a problem to be solved. "That's where machine learning comes in. That's where the next generation comes in," says Jeff Schneider, engineering lead at Uber Advanced Technologies Center. "Because now we can look at all this data, and we can start to make predictions." Everyone knows that when a Beyonce concert ends, for example, there's going to be a lot of demand for Uber drivers. Schneider explains, "[What's harder] is to find those Tuesday nights when it's not even raining and for some reason there's demand -- and to know that's coming. That's machine learning." With enough of the right data inputs, computer algorithms can do the research that Uber drivers already do -- only better, "so the surge pricing never even has to happen," Schneider says.
I've heard a few drivers say that surge pricing is a massive pain because they only make real money when they are out during certain times, when the whole point of Uber is to be flexible for drivers.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
In the perfect market, the price is determined by supply and demand. If the demand raises and the supply stays the same, the price raises. So if you believe the price is too high, just raise the supply as well. Banning price surges just adds imperfections into the market.
Uber circumvents laws to protect passenger safety. They pay lousy wages while slacking on insurance. They don't do appropriate background checks as evidenced by the Kalamazoo shootings. Why should Uber exist at all? They have no interest in protecting either consumers or employees.
I'll get modded to -1 for asking this question so people can pretend it doesn't exist. Those who do answer will attack me and say this is flamebait or trolling. It will be done to evade the question and discredit legitimate problems with Uber.
Can anyone justify Uber's existence? I expect the answer is no.
Honey... There's an Uber driver out here who says you're delivering a baby?
That can't be true, my water hasn't even broooooOMG!!!!
Is this fancy machine Learning going to be out driving Uber cars at peak periods? Or is it simply going to send messages to drivers in a particular area saying "Get your butt out there .. or else" ??
I am Slashdot. Are you Slashdot as well?
Schneider explains, "[What's harder] is to find those Tuesday nights when it's not even raining and for some reason there's demand -- and to know that's coming. That's machine learning
That's not how it works. That's not how any of that works!
Deus! Stop your bullshit marketing and get back into whatever festering hole you crawled out of you twit!
It seems to me that surge pricing isn't a market failure at all. It's how the market gets more drivers on the road when they're needed. I suppose that with good predictive capabilities Uber might be able to get the drivers out slightly before the surge hits, rather than immediately after, and that in turn could reduce the level of far increases needed. But I think it will always be necessary to surge pricing during periods of high demand in order to ensure that enough drivers are on the road.
Otherwise you end up with the taxi problem, that there are never any taxis available when you (and many other people) need one the most.
What is a deficiency in the system, IMO, is that Uber has to set the surge prices. I'd prefer a real-time auction setup, where each driver indicates the rate they need and the max distance they'll travel for a fare, and phone app shows the rider a ranked listing of rides they could get, with an estimated arrival time and cost for each. Then rider and driver effectively negotiate the pricing and Uber just provides the connection between them.
.... he or she should be entitled to charge as much or as little as they want, whenever they want. Uber's price can and should always be fixed, but drivers should feel free to raise their prices to correspond with demand. If they price themselves too high, then they won't get fares at all. Anything that the driver collects over Uber's price should count as income for the driver.
File under 'M' for 'Manic ranting'
Machine learning is the new magic!
If Uber knows a big surge is coming, it can promise drivers 2x the pay to be at a certain area at a certain day/time - when otherwise it would have been 5x or more. So the prediction serves to dampen surge pricing, but there has to remain some incentive to pull more than the normal number drivers to a location...
On the other hand, that's only true as long as Uber does not have a fleet of self driving cars. Then they can use the fleet to entirely remove surge pricing if they have enough vehicles to meet demand.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
In my neighborhood (south of San Francisco), I often find Uber drivers who have to commute 1+ hours to come work around here. If that's a sizable population, it means that if we can predict surge times better in advance, Uber might be able to tell them "next Thursday, you'll probably really want to be on the road because we predict surge pricing." Uber drivers already know that this is the case for either well-defined events ahead of time, or ad-hoc events in real-time, but if you have a long way to go before you can go on the clock, the latter situation doesn't much help you. "Great, it's surge pricing in SF right now, but by the time I get showered and dressed and get down there, it'll probably be gone."
In other words, while you can't actually manufacture new drivers, you can boost the driver supply if you can give at least some of them more advance notice that surge is coming.
This entire post should be quoted; it was broadcast on the radio today verbatim. The only novelty here is the insertion of hyperlinks.
Schneider: And so the idea is if you can predict that demand, you get that information out there – and you get that supply there ready for the demand so the surge pricing never even has to happen. And I think that's one of the really cool things that machine learning's doing for Uber right now.
Supposedly surge pricing is supposed to get more drivers go out on the road because they earn a premium.
Just predicting that you'll need more drivers doesn't actually put those drivers on the road, you'll still need some kind of extra incentive.
You might get away with a smaller surge, but predictions alone doesn't solve the problem that surge pricing was made to solve.
I stole this Sig
Why not just follow people to determine where they are by logging phone data?
What's wrong with a wild taxi?
I think it is good when regulated industries are challenged. This is not to say they should always win, but it is a good thing.
When an industry is regulated, they typically give reasons for the regulations. Safety is normally a big one. In exchange, the regulated industry typically gets certain things outside the 'market'... be it high pricing or monopolies of some kind...
It is always useful to see if the 'unregulated' world is really as dangerous and scary as they say it is. It is equally as important to find out if the regulated world is as safe it is.
I'm from the developing world where informal taxis are quite popular. They were not a big deal. You had a lot to fear from both legal and informal taxis.
Now is there a possibility you will be robbed, sexually assaulted, or just taken a longer route for a larger price? Of course there is.
Here's a better question. Do regular Taxis prevent this. In Toronto recently, it made the news that an Uber Driver sexually assaulted a person.
But people in regulated professions sexually assault people all the time (doctors, teachers...)
And hey, a quick news google search reveals cases in Toronto where regular cab drivers have committed crimes.
http://toronto.ctvnews.ca/toro...
For me and countless others, I don't see the purported benefits of regulated taxis. Uber has worked well for me and countless other people. The supposed problems of unregulated taxis just haven't turned up.
It clearly is not an inferior service. People use it and love it and the rating system is pretty good as well.
Again, this is not anti-regulation post. It is on a case by case and industry by industry situation. Building regulations have a huge benefit. If anyone has lived in a country without building regulations, they know the issues of building collapses and fires.
But taxis, hair stylists (yes, Ontario decided these need to be regulated as well for some reason)... these are the kinds of industries that need to be challenged.
As an Uber driver in SF my experience with surge is that it is predicting demand not reporting actual demand and supply. Surge is an attempt to game drivers and markets to build out Uber's proprietary data set.
Yes, of course, Uber consider the mechanism by which they make more money to be a "failure".
Uber: "We really don't like charging people ten times more than last time they used a service so we've got TOP MEN on the problem to fix it."
User: "Top men?"
Uber: "A computer that will work it all out for us, just like the one we have now, but this one will work differently and fix it."
User: "It's going to keep charging everyone more, isn't it?"
Uber: "Yes."
If they want to do away with surge pricing, how about charging the same price at all times? Surge pricing is just them being greedy and raising the price when they know they can get more. It cost Uber the same per ride no matter the time of day or demand.
--- Keep the choice with the user..
Some call it supply and demand. Others call it surge pricing. I call it gouging. I call it taking advantage.
Imagine if everybody practiced surge pricing. Since more people shop for groceries on weekends, when they are not working, Safeway and Kroeger raise their prices for the 'surge'. Did it cost Safeway more for that can of beans they just sold you?
Hurricane coming? The price of food and water just went up as desperate folks stream in to buy food and water.
Outbreak of the flu? Price just went up on flu shots at the doctors office. Supply and demand folks, just shut up and pay.
And you cannot budget your night out when that $10 ride you took to get to the theater is now $15 and you don't have enough because you over tipped the waiter.
I am reminded of a joke I once saw about buying paint from an airline.
Buying Paint from a Hardware Store:
Customer: Hi. How much is your paint?
Clerk: We have regular quality for $12 a gallon and premium for $18. How many gallons would you like?
Customer: Five gallons of regular quality, please.
Clerk: Great. That will be $60 plus tax.
Buying Paint from an Airline:
Customer: Hi, how much is your paint?
Clerk: Well, sir, that all depends.
Customer: Depends on what?
Clerk: Actually, a lot of things.
Customer: How about giving me an average price?
Clerk: Wow, that's too hard a question. The lowest price is $9 a gallon, and we have 150 different prices up to $200 a gallon.
Customer: What's the difference in the paint?
Clerk: Oh, there isn't any difference; it's all the same paint.
Customer: Well, then, I'd like some of that $9 paint.
Clerk: Well, first I need to ask you a few questions. When do you intend to use it?
Customer: I want to paint tomorrow, on my day off.
Clerk: Sir, the paint for tomorrow is the $200 paint.
Customer: What? When would I have to paint in order to get the $9 version?
Clerk: That would be in three weeks, but you will also have to agree to start painting before Friday of that week and continue painting until at least Sunday.
Customer: You've got to be kidding!
Clerk: Sir, we don't kid around here. Of course, I'll have to check to see if we have any of that paint available before I can sell it to you.
Customer: What do you mean check to see if you can sell it to me? You have shelves full of that stuff; I can see it right there.
Clerk: Just because you can see it doesn't mean that we have it. It may be the same paint, but we sell only a certain number of gallons on any given weekend. Oh, and by the way, the price just went to $12.
Customer: You mean the price went up while we were talking!
Clerk: Yes, sir. You see, we change prices and rules thousands of times a day, and since you haven't actually walked out of the store with your paint yet, we just decided to change. Unless you want the same thing to happen again, I would suggest that you get on with your purchase. How many gallons do you want?
Customer: I don't know exactly. Maybe five gallons. Maybe I should buy six gallons just to make sure I have enough.
Clerk: Oh, no, sir, you can't do that. If you buy the paint and then don't use it, you will be liable for penalties and possible confiscation of the paint you already have.
Customer: What?
Clerk: That's right. We can sell you enough paint to do your kitchen, bathroom, hall and north bedroom, but if you stop painting before you do the bedroom, you will be in violation of our tariffs.
Customer: But what does it matter to you whether I use all the paint? I already paid you for it!
Clerk: Sir, there's no point in getting upset; that's just the way it is. We make plans based upon the idea that you will use all the paint, and when you don't, it just causes us all sorts of problems.
Customer: This is crazy! I suppose something terrible will happen if I don't keep painting until after Saturday night!
Clerk: Yes, sir, it will.
Customer: Well, that does it! I'm going somewhere else to buy my paint.
Clerk: That won't do you any good, sir. We all have the same rules. Thanks for painting with our airline.
Same as charging more for gas or electric in the winter, even though it's not more costly to produce at that time. Price gouging has always been unethical, and a stupid idea besides.