Slashdot Mirror
Uber Drivers Gang Up To Cause Surge Pricing, Research Says (telegraph.co.uk)
Researchers at the University of Warwick found Uber drivers team up in gangs to force higher prices before they pick up passengers. How do they perform such a feat? They trick the app into thinking their is a shortage of cars in order to raise surge prices. The Telegraph reports: According to the study. drivers manipulate Uber's algorithm by logging out of the app at the same time, making it think that there is a shortage of cars. Uber raises its fare prices when there is a high demand for vehicles and a short supply of drivers available. Fares are known to increase during peak times such as rush hour, during public events and late at night. Surge pricing can boost the cost of rides to multiple times the normal rate. The study said drivers have been coordinating forced surge pricing, after interviews with drivers in London and New York, and research on online forums such as Uberpeople.net. In a post on the website for drivers, seen by the researchers, one person said: "Guys, stay logged off until surge. Less supply high demand = surge." The researchers said the collusion reflects driver dissatisfaction with Uber's policies regarding them, and exposes the "ethically questionable" nature of its algorithm. It is not clear how much impact the trick has had on prices. Uber denied that the practice is widespread.
Not sure if trolling, but... Surge pricing comes into effect when there is a shortage of cars. In order to reduce demand and attempt to increase supply, the price is increased. Taxi companies do not have the option to raise prices, and since they are heavily regulated there is a finite number of cabs you can have on the road. Therefore they do not have any mechanism to attempt to limit demand.
I was at a large concert last weekend, when it let out an Uber ride shot to $100+ where earlier it had cost $15 to get there. That same cab ride would have cost somewhere around $20-$25 in both directions, on the way to the concert it would have been OK, but it would have likely taken me 2 hours to get in one on the way home. If I was willing to pay the surge price on Uber I could have been in a car and on the way in 10 minutes.
So my choices were: 1) Be cheap, but not get home for 2 or 3 hours. 2) Pay the exorberant prices and be home in under an hour. or 3) The one I took, jump on the light rail until I was far enough outside of the surge area to grab an Uber home. $5 for the light rail, $25 for the uber. Took a little over an hour to get home.
But the operators (drivers) aren't setting the prices. Uber is.