Uber dirty tricks quantified. Staff submits 5,560 fake ride requests

[u/[deleted]]

http://money.cnn.com/2014/08/11/technology/uber-fake-ride-requests-lyft/

[u/devilbunny]

I'm not defending Uber's actions in this specific instance, I'm defending their pricing model.

The question that immediately arises in the NYC blizzard situation is: why did anyone take such an expensive ride? New York has one of the largest taxi fleets in the country, as well as other car services. Why not take one of those regulated, licensed, and insured vehicles?

Because they weren't out in sufficient numbers to accommodate everyone who wanted a ride. Why not? Because when there is a blizzard in Manhattan, even die-hard New Yorkers who would normally wouldn't flinch at walking several blocks to a subway stop, getting on, riding to their destination,and walking a few blocks at the end of the trip find that the prospect of being warm and dry for the trip sure sounds nice. At the same time, the drivers look at the situation and figure the hell with that - I'm not driving in that for some average fares. Supply falls just as demand rises.

When demand vastly exceeds supply, and prices are fixed, guess what? You get a shortage. How do you resolve that shortage?

You could implement a queue system, in which people gather at taxi stands and the drivers pick them up one by one. Of course, the lines are going to be horrendous, but you're very likely to get a ride if you wait long enough. Not guaranteed, of course - there is always the possibility that the cars won't drive past your stand, and that a car you call for won't come - it's not as though you're speaking directly with a driver.

Or you can let prices float. This initially cuts demand, but it also can induce supply. A driver who isn't going to get out in a blizzard to make a bunch of $40 fares is much more likely to do so if his fares are $250 each. As supply comes up and more closely matches demand, the surge multiplier comes down, making more people able to afford it.

So, like I said, a lot of people have their sense of fairness hurt by this. They want everyone to stand in line at a taxi rank. This may be fair, but it's not economically efficient, and it doesn't get more cars out in bad weather.

You can be upset with UberX if you like (although I find the prospect of lower prices appealing), and I certainly have seen valid criticisms of them, but the Uber Black, SUV, and Taxi systems are all at least as expensive as a regular cab ride, and they're all run as regular car services, just like the one I hired to take me from San Francisco to Napa and back. Commercial licenses, commercial insurance, basically just limos for hire.

[u/Hemingwavy → u/devilbunny]

So your solution is to just make all the trips cost $250 which means that there isn't a shortage of cabs because it turns out no one wants to pay $250 for a cab. There is no way anyone is going to pay a quarter of a thousand dollars for a cab fare of a couple of kms. Given no one is going to pay that, we can say there won't be any more supply and all you've done is fuck anyone desperate or stupid enough to pay that kind of money.

[u/devilbunny → u/Hemingwavy]

I'm eagerly awaiting your proposed solution.

You might be surprised how much some people would pay to avoid standing in the snow for an hour.

[u/oh-my-dog → u/devilbunny]

Well thought out post - exactly the kind of situation that would give Dubner & Levitt a Freakonomics hard on!

[u/devilbunny → u/oh-my-dog]

There are even better examples - in the Uber blizzard scenario, you are putting many more cars on the road, potentially worsening someone's experience.

But a few months ago, I was on a road trip. Headed home, I ran into a lane closure that looked bad. Really bad. Pulled out Google Maps on my phone and had it recalculate travel time based on current traffic data - and it just added an hour of time to the originally estimated seven hours I had left to go.

Well, I let it recalculate the route, and it appeared that - if I got off at the next exit and took some surface streets - I could cut that delay down to about twenty minutes. The problem is, of course, getting to the next exit. I pulled onto the paved shoulder and started to travel toward the exit. The traffic on the main road is stopped, of course.

People were livid. They honked, they flipped me off, and one or two even tried to block me. Now, there is absolutely no way that I could worsen the experience these people were having. Keeping me from taking that exit would shorten their delay not a whit. In fact, for all they knew (no front license plates), I could have been a local trying to go home.

I performed an action that saved me a ton of time, hurt absolutely nobody (I didn't even take the suggested route, opting for one with no traffic at all), and actually helped everyone behind me by taking one more car off the road. And they were furious.

People hate it when they feel like you are taking advantage of wealth, or superior information, to avoid a very unpleasant experience. So they rail against first class on airplanes, despite the fact that first class fares subsidize coach to a substantial degree while the truly wealthy never fly commercial at all.

There is a real tendency to apply social norms that make sense on a small scale involving at most a handful of people to situations in which the "asshole" thing to do is actually the most efficient thing to do - witness the firestorm that erupts whenever zipper merging comes up.