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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.
This is what you get. One hell of a race to the bottom. Seriously, we didn't regulate cabbies because we were poo-pooing all over their fun. It was crap like this.
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Not for long.
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Get gamed by the algorithm.
Well no surprise there. When you have systems that just increase prices blindly when there appears to be less supply, of course the drivers are going to take advantage. The drivers as well as the owners are all playing the same game. And of course, we all lose. The idea of automatically increasing a price due to perceived lack is easy to abuse and fake. The real problem is there is no government agency holding Uber subject to any regulations or lawas that would control such of abuse. This is clearly price/market fixing, but the government agencies always seems to wait until someone does the obvious, look for a platform to exploit for elections, and then they do something very minor (or nothing in reality because the corrupt business greases the wheel). This is what info collected from those apps installed was used for ladies and gentlemen. Apps aren't needed for this service (web portals are fine) but they get sweet info for the business to exploit. The Drivers just made it more obvious and spelled out for us what we would already know if we were paying attention. It's no less wrong for the drivers than it is for Uber. At least Taxi drivers aren't at liberty to do this sort of rate hiking, at least not in North America to my knowledge, but then again, they are regulated. Uber is not. I was never a fan, not because I'm loyal to taxi drivers, but because the history of these services, the mandatory use of an app for this services, as well as the personality of the owner, all pointed to behavior of this nature. We either need more competition to keep Uber honest or people need to boycott Uber until they use a flat model pricing model. Easier to compare against the competition.
"Imagination is more important than knowledge" - Einstein
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.
This is what happens when producers (the drivers) can't freely set their own prices.
If the drivers are really independent contractors (as Uber claims they are) then they should be free to set their own rates. Staying off the road and waiting for surge pricing is just a clumsy way to get around a missing feature in the app. The result is not really great for anyone.... even the drivers, since they potentially will end up with less total profit in exchange for higher marginal profit.
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.
Uber has total control the market (of people using the Uber app). They implemented a stupid pricing algorithm which is easy to game by drivers logging off. Rider wait time would be a better measure, since a driver deliberately withholding rides to make riders wait more would mean the driver gives fewer rides per day thus making less money.
A deregulated market would be a craigslist-type site where people wanting rides post requests. Anybody wanting to give them a ride places a bid (if they're first), or places a lower bid than the previous bid. The rider selects a winning bid after they're tired of waiting for more bids to lower the price. Lots of drivers bidding each rider within x minutes of their request means the price goes down, few drivers bidding on each rider means price goes up. Riders willing to wait for a ride pay less, riders in a hurry pay more.
In a deregulated market, the price adjusts naturally in response to real fluctuations in supply and demand. In Uber's market, their algorithm sets the price, apparently based on an easily spoofed measure of supply.
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.
Because they show up when you ask.
Cabs don't really work that way around where I am (or really anywhere I've been with under 250,000 people).
My uber usage meshes with people doing second jobs, cabs can't really cover high demand without taking a bath on capital buying extra cars.
It has nothing to-do with money, and little to do with hatred of talking on the phone, it has to do with availability and quality of service.
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
and 'them' here isn't the drivers, they're victims of circumstance being taken advantage of by their employer. I'm not entirely pleased with the way Uber does business. Such things were banned decades ago when minimum wage law went through. And before you can bring it up we didn't put minimum wage in so teenagers could buy swank cars, we did it because people weren't given enough to live. 20 years of weak wage growth has got us back to that again meanwhile companies like Uber dodge the few protections employees have left.
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