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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.
Why would someone pay ridiculous prices, when a regular cab will cost you so much less... Is it just because you have to talk to somebody to order a pick up instead of simply pressing a couple button in an app?
how is this a surprise to anyone?
It's not only about deregulation but about fair pay. They wouldn't have to do this if the company paid well. If they paid well, then the drivers would think twice about it. As it is, you make people desperate enough, make their lives miserable enough then morals and ideals become secondary to survival.
So when all the drivers log back in, the supply goes way up. Surge pricing should drop like a rock very quickly if the system is designed correctly. And if you're coordinating all that effort for only 1-2 drivers to get the boost (and likely not you), that ends this behavior almost immediately.
Lookee! It's a market, a free market for transportation! Lookee, pricing is based on supply and demand! Lookee, inside actors are manipulating the market to their advantage! It's like Wall Street in microcosm.
Yup. People learn how to use the system to their advantage. One problem with this sytem is Google. If you set a destination and get directions under hire it will show Lyft and Uber fares so if ine has surge and not the other guess who will get the business? Fare transparency overcomes collusion in this case. Unless most drivers drive for both and do this in both cases it is not a good long term strategy. In addition, Uber and Lyft could monitor the drivers and penalize collusive behavior. For example any driver who dropped off and came back when surge pricing started could simply not be given ride opportunities until the surge ended. Thus drivers who didn't game the system would get the benefits while those who do lose money from their collusion.
I'm a consultant - I convert gibberish into cash-flow.
Seriously, as an ex-musician I get a kick out of this discrepancy everytime people justify ripping/streaming/downloading music for free. I'm no fan of the MPAA either but music creators deserve to be compensated for their work. The argument raised is always that artists are rich enough or artists make their money performing and don't deserve to be paid for a recording.
I know someone will come along and vote this down and have a rebuttal that will get high votes but just remember this when it comes to your livelihood that is threatened. Because, it will happen to us all...