Uber Is Using AI to Charge People as Much as Possible for a Ride
motherboard.vice.com
motherboard.vice.com
Profit maximization is not inherently evil unless it's monopolistic. Which in the case of ride sharing, it isn't.
The concept of the consumer surplus is the reason why capitalism is preferred over other economic systems such as feudalism or communism.
One price for all is a cornerstone of our social contract. Discarding it will place that contract in danger.
If all the profit in a trade goes to the robber barons, such trades will be rightly seen as unfair and calls for the revolution will become loud.
...but we've had price discrimination for decades in the form of coupons, airplane tickets, and senior discounts. I don't see a particularly loud revolution, at least where I live.
And their price discrimination is fairly transparent, it's the opaque discrimination that gets people ranting. Nobody likes being ripped off.
Coupons & senior discounts are tolerated both because they're transparent and everybody can or will be able to use them.
Ever heard of the "Tesla Tax" for people installing the outlet needed to charge their Tesla?
This is considerably different, being opaque. Once this gets out, everybody taking an Uber will have that nagging feeling in the back of their head, "was I ripped off this time?" And it'll make them think twice the next time they go to order one.
People act very emotionally to the idea that someone else got a better deal than they did.
It could just as well be that the "higher, weekend" price is the "normal price" and the weekday price is the "deal, sale" price.
Think about it this way: You would probably pay a hospital your net worth if you had a child and he/she was seriously hurt and taken to a hospital. B would you think leveraging this information to take more money from you be "fair?"
If you don't like what Uber is charging you, then don't take Uber. You can consider whatever constraints you like when determining the price you're willing to pay: convenience, time, cost, cleanliness, location, whathaveyou. Maybe you value your time less than the cost of an Uber, so you can then walk to your destination. You ripped off Uber then by using your two perfectly good feet, and showed those capitalist fatcats by not even using their service!
The comparison to a serious hurt child is not an appropriate comparison (also, "think of the children!"), because the service is not fungible in that case.
Is someone going to show up and make the same arguments for why people with higher incomes shouldn't pay higher taxes? If there's nothing wrong with progressive taxation, then there's nothing wrong with progressive pricing, and the only difference is that you're forced the pay taxes while you're not forced to purchase services from any given vendor.
And I'm not arguing this from a purely economics perspective. Yes, I know discriminatory pricing has its place in our society today and yes, I know it's profit maximizing, "fair," etc. But what's different here is that unlike airlines that have an algorithm deciding the same price for anyone buying that seat at that particular time, Uber can discriminate against you for very personal reasons, or general reasons that can discriminate against the racial makeup of a neighborhood, the disabled, etc.
Hats off to your sense of duty to capitalism that'd make Milton Friedman proud, but the world doesn't work like an Econ 101 textbook. If Uber's profit maximizing algorithm is discriminatory against protected classes, it's illegal. If it's profit maximizing by overcharging people lulled into usage due to habit, dying phones, etc. it's still predatory.
P.S. regarding your "think of the children" critique, I'm simply offering a direct counterexample to your "whatever price you pay and agree to == not getting ripped off." According to you, it does seem like you can be ripped off after all, even at a price you were willing to pay.
In the hospital example, if you had a choice of several hospitals at different price points and chose the more expensive one, then it is fair of them to demand the price they quoted upfront.
Likewise, if the hospital needs the money just to cover the expenses incurred in trying to save the child, the price is fair as well.
But if they have a choice and you don't, they are unfairly abusing the situation. (See also: Martin Shkreli jacking up the price on a drug exclusively manufactured by his company.)
That is a very strange statement - could you explain how did you come to such a conclusion?
But if the producer is able to capture the surplus, the already rich capture all of the profit, and the system becomes much less balanced, the poor & middle class start feeling even more exploited by the rich. They decide that it's better to have a small pie divided evenly than to just have the crumbs from a large pie, and start voting in candidates who promise to dismantle trade deals, tax the rich, et cetera.
This is essentially the same, except there isn't even an option for haggling.
Using 'visceral, gut level' as a guide for ethics usually leads to ugly consequences.
Same thing here. Is it fair for me to get charged more than the next person for the same trip? Everyone understands the feeling of unfairness (even dogs [1]). Humans don't make perfect mathematical choices, which is why the entire field of behavioral economics exists, and it's why Uber will be eventually forced to provide even pricing, whether they like it or not.
So while the word "Uber" might trigger some people, I think there's a broader, more interesting conversation to be had here outside of the Uber context.
For example: https://www.amazon.com/dp/B00J5HK3MY one can of Ajax (same size) costs $0.99 in Rite Aid.
Perhaps people who are buying cleaning supplies from Amazon are so used to it that they never visit local stores?
What is stopping networks of Amazon users from forming co-ops where each purchase is checked against and ordered by the user with the lowest price?
But I don't use them because I'm lazy and millions of other customers with Amazon prime are too.
As long as Uber is not the only means of transport, this issue should take care of itself. Besides, as another comment points out, isn't this pretty much standard across industries?
Not sure what this has to do with Uber in particular which doesn't apply to any other company.
How would you fell if prices on amazon were higher for you than for others because of your income, residence or historical purchase data? With all the margins going to amazon instead of the sellers.
Byw plenty other retailers already do or did adjust prices: Apple users are commonly targeted for being price insensitive.
Just shop using different browsers or devices. Use incognito modes for everything. Use multiple entry points. Use multiple loyalty cards (and don't intermix credit cards amongst them.
For a real-world example, I use 4 different Starbucks cards. Each gets very different reward offers, every time. Y
People like to use this as an excuse to attack capitalism in general, a la "if corporations didn't run things, we would charge as little as possible instead of as much as possible". However, this is entirely missing the point; it's critically important that businesses charge as much as they can get away with. Why? Because prices are how market information is communicated, and high profit margins indicate an imbalance between supply and demand. If Uber charged the bare minimum they could get away with and still survive, there would be no incentive for competitors to come in and attempt to undercut them, leaving the supply/demand mismatch as it is. In a zero-overhead idealized market, competitors would keep coming in until profit margins were within epsilon of zero; obviously we can't do exactly that in real life, but we want to get as close to that as possible.
Why? If supply/demand is mismatched in such a way that a competitor is necessary, then some potential Uber customers are not being served. Then either the customer can't even afford the minimal price, in which case competition doesn't help, or Uber's service is unavailable for some reason, which provides incentive for a competitor to come in and capture the market segment.
It is not absolutely necessary that everyone charge as much as they can; it just happens to be the case that money tends to be controlled by people who would like increase its amount.
In the hypothetical case of Uber turning into a charity that charges as little as possible, the price would simply include the market information that someone is willing to use their money to subsidize everyone's fares.
Uber has different situations in different places, but to me it seems that they only have real competition in some cities in the US.
1. Profits are capped.
2. The company cannot gauge or drop service to non-profitable customers.
Neither applies.
2. Every private entity, in free market capitalism, has the right to refuse service to a customer if providing that service is not beneficial to said entity (bar some race, age, etc. issue). Are you making an argument to remove that right?
If this is true, it's obviously different for everyone. And as long as Uber doesn't have a monopoly, this sounds perfectly reasonable to me.
Price discrimination is _wonderful_ for the poor. Extract tons of money from the rich who don't give a shit, but still sell the service to poorer people at a price they can afford, with almost all the same benefits.
It sounds like they aren't paying "my peers" more. They're just charging more and taking a bigger cut.
Not saying they don't deserve it, but somehow they have a scandal in the news every other week since a few months.
Given the reputation of this company, I wouldn't be at all surprised to hear this change at some point in the future.
I'd be very concerned that they're somehow charging more to a protected class. Yeah, pricing is a bit of a black box, but that isn't a defense against "blacks end up getting charged $1.2 for every $1 whites get charged for equivalent rides". There's enough protected classes that you can basically do p-fishing. "Uber price discriminates against black people" not statistically significant? Run the numbers again with Asian instead, and see if it comes up. Or women. Or religion (rides to church service more expensive? Whoops.)
Note that being purely profit-driven through your pricing scheme isn't a good defense. There could easily be a "taxis are racist and won't go into certain areas, therefore Uber has less competition serving black neighborhoods, therefore Uber can increase their prices there."