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Comment by 6gvONxR4sf7o | Hacker News Reader

> ...the company’s upcoming pricing algorithms, which they hinted might be able to more precisely predict what riders might be willing to pay for a ride.

I hate the whole idea of this. If they track you around, maybe realize you order from fancy places on uber eats, then they will raise prices on something that costs them the same. There's something that strikes me as especially awful about automating the "how much is this individual willing to pay." It's like the worst parts of searching for air fare.

Yet another reason to advocate for privacy, so they can't just buy records about you to determine your price sensitivity from the rest of your life.

If everything everyone bought had perfect information on what they're willing to pay, I wonder what markets would look like. Would getting a raise immediately cancel itself out?

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Knowing the max someone was willing to pay could help an actor set their prices optimally where there is no competition. Where there is competition, setting price to the max someone is willing to pay could drop overall profits since a competitor would happily undercut. So it does not change the rules of the game.

Companies already price by predicting what people are willing to pay, by theory and experimentation. I wouldn't expect them having perfect information change much other than quicker convergence to the prices they would set anyway.

With only two competitors here, there'll be plenty of producer surplus I'm sure.

But does that guarantee that the prices won't increase proportionally to your income? Companies are incentivized to make you buy stuff, not to make you motivated to make money.

yeah, agree fully with this. seems like a grey legit way of squeezing people for more money based on their normal day run indulgences.

Except corporations have already agreed to not seriously undercut each other... Geographic monopoly, understood collaborative price hikes... Forced plan changes post-capture that eliminate the most common plan and squeeze out an extra $5 per customer....

Simply having another player in the field is not competition, despite the federal government's claims.

That effectively requires a cartel with high barriers to entry, otherwise not doing that is an immediate competitive advantage to any new challengers. It's pretty hard to build your own last mile telecommunications network, how hard is it to build a ride sharing app?

It's not hard to build a ride sharing app.

It is, however, hard to get drivers and customers FOR your ride sharing app.

Not if you can undercut the existing ones on price.

A ride sharing app is a dual marketplace. If you're cutting the price for riders past a point, you're cutting the pay for drivers.

That's assuming the incumbents are giving the premium for those customers to the drivers.

But even if they were, the drivers are in a competitive labor market. If you get the customers with lower prices then you can also get the drivers because they'd rather be working for your rate than not at all.

But you will never get customers without drivers and you will never get drivers without customers.

Plenty of Uber/Lyft competitors have tried and failed. Heck, a few different companies tried here in Austin once we grew a spine and banned Uber/Lyft, only to die as soon as they came back to town.

Price is not the only factor for me as a consumer. The other is availability, or time to wait for pick-up. That is determined by how many drivers are around. Similarly, drivers like to have their next ride soon after their current one ends.

Thus, you have economies of scale for multiple reasons (big upfront investments for app and marketing, network effects).

As such, there are high barriers to entry.

> how hard is it to build a ride sharing app?

then why are there only 2?

There aren't, there are at least 7 (that I know of) in my city: Uber, Lyft, Cabify, FreeNow, Bolt, Taxify, MyTaxi.

Personally I've never heard of any of those except Uber and Lyft.

How is building a ride sharing network not an area with high barriers to entry?

It's not that hard to (legally) collude on something like this, especially with an effectively-two-participant field, the way Uber and Lyft are in many markets. It's one of the basic solutions to the iterated prisoner's dilemma (though it's by no means guaranteed).

> Companies already price by predicting what people are willing to pay

So does anyone else who is doing work. For example, have a contractor come by your home to give an estimate on roof repair. It'll be highly dependent on him sizing up you and what you can apparently afford.

That’s where the invisible hand comes in and having functional markets matters. The difficulty in sustainably operating is also a demonstration of why heavily regulated taxis existed.

When I had my roof replaced, estimates ranged from $12,000 to $75,000. We got 11 bids and paid $14k. That’s market forces at work, but also an example of a market without high capital costs.

those probably weren't all the same product though? like impact resistance shingles with an air gapped radiant barrier layed down with a ventilated roof line and all that fancy stuff is certainly going to cost more than generic shingles over tar paper.

My bids on my roof were 6k to 54k.

The 54k bid included a whole house energy audit with positive pressure tests and some stupid stuff. The bids from 6k to 32k were for the same literal shingles (architectural ) with the same installation and the same tear off and the same warranty.

The one pattern I noticed was the bids over 25k showed me a video with company values. (One talked about how Christian the owners were) The bids under 25k I got like a 5 minute explanation and a chance to ask questions.

Think I spent like 7k on the roof and it’s great.

Nope. I gave them a bill of materials for apples to apples offers!

that's pretty crazy. thats like a high end metal roof with all the extras on the high end you were quoted for.

Totally. Some of these guys just throw out crazy stuff if they’re booked up. I’ve done a lot of procurement at work and I’ve seen it all.

My dad got a siding company that quoted $120k to do the job in the middle of winter for $30k.

Yep, if someone actually hits on one of those high profit bids, it gets scheduled first, and a low profit job gets pushed.

When you have no jobs, you'll take almost break even to prevent employee loss.

If there were an ability to resell on a secondary market it'd probably level out like you say. If you sell me something at a super low price, I can turn around and resell it for a typical price, which would usually level this out (effectively being more players in the market). But with todays "everything is a service" market with 50 pages of terms and conditions, it doesn't work.

Discriminatory pricing feels nasty when you're get the short end of the stick but any pricing scheme will have bias. Having a high wage earner pay the same fare for a service as a low wage earner gives a much better deal to the wealthier person. (In Finland traffic tickets are calculated as a percentage of your income) In many countries you will pay a surcharge if merchants think that you are wealthier since it implies a greater ability to pay. (Bulk discounts are not universal) The point where a flexible price structure becomes a problem is where price gauging is being practiced to take advantage of people in a bind.

Finland traffic tickets sounds like a horrible idea.

Sounds good to me. The rich is as afraid of getting a fine as the poor one. Otherwise rich people just wouldn't care.

It is true that a score based system with no money involved would be equally useful but I guess people fear more about their money.

This is a great idea and also is nearly impossible to implement. There is no way to tell how wealthy someone is and even then how much of that wealth is liquid.

It's not based on wealth but rather income, and the state obviously has this data readily at hand due to taxation. I don't see any reason why that couldn't and shouldn't be adopted all over the world.

Why?

If I'm a poor speeding Fin, then a non-scaled speeding ticket could cost me a good number of days food. If I'm a rich speeding Fin then a non-scaled ticket is just the cost to travel quickly.

When you're wealthy enough fines don't matter there's no point in the police enforcing them aside from as an additional income stream.

Best way to make Rich people move out of Finland, result in loosing tax base, jobs (businesses) etc

You're confusing rich people with assholes, losing assholes is not an issue.

Rich people are going to leave Finland because they aren't allowed to drive recklessly with no real consequence? Well, then maybe they should leave.

If they drive the same way as everyone else (i.e. mostly following the spirit of the law but nobody's perfect) and then get hit with a colossal fine over a minor violation, yeah, that's the sort of thing that causes people to do the math on living somewhere else.

But it's relatively only as colossal to them as it would be to anyone else.

A million dollars to a millionaire is still a million dollars. The net present cost of moving might increase with wealth, but it doesn't increase linearly. It might cost a millionaire $200,000 instead of the $50,000 it would for someone in the middle class, but they also have the $200,000, and if you would fine them $1,000,000 instead of $1000 then threshold exceeded.

Speeding has a constant negative effect on society. It doesn't vary based on how wealthy the speeder is. Therefore, if the rate is higher for some people, it's either insufficiently disincentivizing poorer people from speeding, or excessively disincentivizing richer people.

Pigovian taxes should be constant. And if it's not pigovian, why give tickets at all?

It has a constant negative effect so you need a penalty that has a constant discouraging effect.

A flat fee doesn't discourage those with more money to pay it. It simply says "speeding is OK if you have enough money."

A constant fine has a constant discouraging effect.

No it doesn't. A fine's discouraging effect is proportional to the person's ability to pay for it.

I ran through the model in other comments, so I won't repeat it here, but in general the disincentive is the same, but people's desire to do something that costs a certain amount goes up with their wealth (called an income effect in economics).

> A constant fine has a constant discouraging effect.

In this scenario it is constant percentage though, as far as I understand it, and therefore should be constantly discouraging.

How so? I explained the model at length elsewhere in this thread.

> Therefore, if the rate is higher for some people, it's either insufficiently disincentivizing poorer people from speeding, or excessively disincentivizing richer people.

I don't understand how you reached this conclusion.

> Speeding has a constant negative effect on society. It doesn't vary based on how wealthy the speeder is.

The point of a speeding ticket isn't to make things right or to make amends for the bad effects of irresponsible driving. That would be impossible, since people die. The point of a speeding ticket is to serve as a carrot, or to be "pigovian" to use the term that you just made me look up. Since you understand that well enough to apply the word, I don't see why you could possibly argue that they should be constant, since 1% of people or so can (and do) just straight up ignore the law otherwise. A frequently reposted thread explains the reasoning well - https://i.imgur.com/3OeKrA2.jpg

Yes, if you value doing something more than the negative value to society, you should be permitted to do it. This is the entire point of pigovian taxes.

The trick here is to apply the golden rule and adjust the negative-value (an average-stranger's death) to the equivalent value applied to you (apparently-rich-stranger's death). Then you'll realise the cost of the fine needs to increase proportionally to your wealth (no, I'm not actually a fan of valuing people by their wealth, but you seem to be implicitly arguing for that).

No, because a wealthier person is not more likely to harm a wealthy person while speeding. Again, the harm is constant and does not depend on the speeder's wealth.

Oh, I see what you're saying. Then no, taxes like this are not pigovian if pigovian means (wiki:) to "correct an undesirable or inefficient market outcome, and [to do so] by being set equal to the social cost of the negative externalities".

Again, that goal is impossible with speeding tickets. The "negative externality" in this case is literally that someone dies. Someone (a lot of someones) lose their kid, their life partner, their parent. Can you apply relatively simple financial analysis to assign a dollar value to that? Sure, but fuck the kind of person that wants to do that; that is not acceptable for any so-called "justice system."

The point of the tax is not to "correct the undesirable outcome" but rather to avert it as much as possible using reasonable techniques.

And no, the rich absolutely should not be allowed to do it more.

Pigovian taxes are applied to mortal situations all the time. The most famous example is probably a carbon tax.

>The point of the tax is not to "correct the undesirable outcome" but rather to avert it as much as possible using reasonable techniques.

If you want to avert it as much as possible, set a million dollar fine for everyone. Why is that unreasonable in your view? If you don't think that would be a good idea, you're implicitly valuing it at less than a million dollars.

Well, I don't have a million dollars, so I wouldn't be able to pay that fine. It does not make sense to try to implement an unsupportable system.

I did not say a good objective was to avert people from speeding "as much as possible" (or I would simply destroy all cars). I said "as much as possible using reasonable techniques." I am not trying to revolutionize the field of public policy economics, here; I am just arguing against a system that assumes that a dollar means the same thing to me that it does to Steve Jobs; it does not, and some adjustment is appropriate.

You're definitely arguing with various premises of public policy economics. Although you believe monetary fines are appropriate, you also claim to think we can't trade-off sacred values such as avoiding crime against mundane values like money.

The beauty of a Pigovian system is it doesn't require any assumptions as to how much money is worth to different people, or for that matter how much actions are worth. It just calculates the harm to society of the action and sets a fine accordingly. This is very much standard economics, see https://www.jstor.org/stable/725557 with 300 citations.

>I don't understand how you reached this conclusion.

Set X= negative value to society of an action we want to discourage, and Y= probability of getting caught.

If a fine is set at X/Y, then the expected cost of doing this action is X (fine times probability), and so it will be done if the value of doing it is above X and won't be done if the value is below X, which is efficient. Any value other than X/Y is inefficient.

The model you've presented doesn't account for a lot of other effects which we want as a collective want to account for. Let's break it down.

We can't assume perfect humans, so we must assume that sometimes, some of the people will act irrationally or make mistakes. Introducing this "error rate" into our actors means there's an un-removable noise floor of cases where we issue fines to our actors for breaking the law.

This noise-floor of mistakes leads to some very unfortunate side effects when we use constant fine pricing. Assuming an income distribution like what we have in reality, this means that a certain percentage of our population will have so little income that the fine will ruin their life, making them less effective and thus our population less effective. And there's no way we can remove this by adjusting the price of our constant fine. If we remove the fine, then everyone speeds. Even at the best sweet spot, we'll have a system where some people will always speed, and some people will never rationally choose to speed but will be economically "killed" by the fine anyway.

These two inefficiencies are what variable fine pricing are meant to address. By scaling price with actor income, we are able to maintain a similar relative (dis)incentive across income levels, and we remove the cases where we are sentencing a portion of the population to economic "death".

>By scaling price with actor income, we are able to maintain a similar relative (dis)incentive across income levels

This is manifestly untrue, as I showed above.

If you're concerned over extremely poor people being unable to pay the cost, you can waive that or subsidize it. That's far from sufficient to justify scaling.

> Assuming an income distribution like what we have in reality, this means that a certain percentage of our population will have so little income that the fine will ruin their life, making them less effective and thus our population less effective. And there's no way we can remove this by adjusting the price of our constant fine. If we remove the fine, then everyone speeds. Even at the best sweet spot, we'll have a system where some people will always speed, and some people will never rationally choose to speed but will be economically "killed" by the fine anyway.

We already have a system for this, which is that the fine for speeding scales with speed. Then someone who can't afford the fine can drive more conservatively, so that if they make a mistake the degree to which they violate the rule is smaller, which reduces both the probability of enforcement and the amount of the fine.

Having at least that level of fine is inherently necessary, even for lower income people, because otherwise there is insufficient disincentive for them to speed and there is no compensation to society in the form of a proportionate fine when they do.

We can let a rich person get a thousand small speeding fines because taking their money and using it for lead abatement or cancer research saves more lives than they're risking. But we can't let anyone take that risk without "paying for it" or the net result is a very big social loss, multiplied by every person in that category who longer has any incentive not to do it.

Moreover, talking about "economic death" over a matter of something like a $250 fine is an exaggeration. Even for someone making the federal minimum wage, that's less than 2% of their income. That amount of money doesn't make the difference between whether anybody files for bankruptcy or not, it only makes the difference between whether it happens this month or next. And if you want to help those people, don't waive their traffic fines, just take all the money you would have waived in traffic fines and give it to lower income people regardless of whether or not they violated a traffic law or not -- so that you're helping them but not giving them incentive to misbehave.

It's unnecessary to set a fine so high that the person doing it would "pay back" the harm to society on average if they did it. You merely have to set a fine so high that it deters people from doing it.

Let's say speeding causes a harm of 500 dollars, and there's a 10% chance of getting caught. Then you would put the fine at 5000 dollars. However, it might be the case that a 500 dollar fine (with an expected payment of 50 dollars) is already enough to stop everyone from doing it, since nobody likes speeding so much that they would pay 50 dollars for it on average. In that case, setting a 5000 dollar fine would just be overkill, and it could hardly be called efficient.

Moreover, your answer assumes that utility can always be measured solely in terms of money. If we measure the utility of society in terms of the number of people speeding (lower is better), then no amount of money can compensate for an increase in the number of people speeding. Then the answer would be to set the fine such that the number of people who choose to speed is the lowest, and does not involve the "expected harm" to society at all.

Even if you do assume that there is a conversion factor between "number of speeders" and "money", then it might still be sufficient to set the fine at a much lower number than you would get using your formula. You cannot just take into account the utility of the society, you also have to take into account the preferences of individuals (which guide their actions).

This can also be used to justify individual fines: if a 100 dollar fine is enough to stop you from speeding, and a 200 dollar fine is necessary to stop someone else from doing it, then why should I set the fine for both at 200 dollars? How can this be called efficient? You could argue it's more fair, but that's more a question of what's moral and has little to do with simple calculations, which you seem to be advocating for.

Yes, if for whatever reason nobody values an activity over the fine my formula produces, then any amount in between will be equally efficient: in your example any fine above $500 is equally efficient. But note that nobody ever pays the fine! In the real world, someone ends up paying the fine, it is not the case that fines deter everyone. So your example isn't reality.

>Moreover, your answer assumes that utility can always be measured solely in terms of money. If we measure the utility of society in terms of the number of people speeding (lower is better), then no amount of money can compensate for an increase in the number of people speeding. Then the answer would be to set the fine such that the number of people who choose to speed is the lowest, and does not involve the "expected harm" to society at all.

Sure, if your goal is prevent speeding at any cost then you should set the fine to be infinite. Or rather, set it at max wealth (since above that can't be collected) and pour all your policing resources into detection. Obviously, this also doesn't reflect reality.

>This can also be used to justify individual fines: if a 100 dollar fine is enough to stop you from speeding, and a 200 dollar fine is necessary to stop someone else from doing it, then why should I set the fine for both at 200 dollars? How can this be called efficient?

Again, it depends on the goals. In my framework the goal is to prevent people from doing something that harms society if and only if the benefit they get from it is less than the societal harm. Setting the fine equal to the harm (modulo probability) does that. If you charge some people more than this number, then they'll be deterred away from the action even when it would be efficient to do it. Conversely if some people are charged less.

I think the argument is over whether the fine must be denominated in currency units. As I understand it the Finnish system chooses to price their speeding crimes in days of spending money. If you don't mind paying the fine in those units, you can just as well ignore the law.

> It doesn't vary based on how wealthy the speeder is...Pigovian taxes should be constant.

Speeding is not a market activity and a speeding ticket is not a tax. Speeding is either a misdemeanour or crime, that means it is simply prohibited. Period.

The state of affairs you refer to, where the speeding ticket is considered just a cost of doing said activity is exactly what we want to avoid, and income-based speeding tickets are one mechanism that does this.

The purpose of a speeding ticket is to (a) punish and (b) deter. Both essentially don't work on rich people if they are too low, as you amply demonstrated, because they will consider this just a tax or similar minor nuisance. On the other hand, the fine that would actually deter a rich person from speeding might bankrupt a less wealthy individual and would therefore be disproportionately heavy.

>Speeding is either a misdemeanour or crime, that means it is simply prohibited. Period.

Why not set the fine to a million dollars for everyone, then, or at least significantly boost the fine? Under my framework it's easy to answer, since it's inefficient to disincentivize speeding that much.

>The state of affairs you refer to, where the speeding ticket is considered just a cost of doing said activity is exactly what we want to avoid

Why?

>Punish

What is the benefit of punishment outside of deterrence? And for deterrence, the clear economic answer is to have the same amount of deterrence for everyone, which requires a constant fine.

> Why not set the fine to a million dollars for everyone

Because that is a disproportionate punishment for speeding for most people. We don't do disproportionate punishment.

It's also why we don't hang people for stealing. Any more.

> [it's not a tax] Why?

Because allowing speeding and taxing it is not the goal. We don't want people to speed. Even rich people.

> same amount of deterrence for everyone

Exactly.

> which requires a constant fine.

Er, no. Exactly the other way around. To make the deterrence effect the same for everyone absolutely requires the monetary amount to be different. The deterrence effect of an economic fine is hugely dependent on how much money you have/make.

If I make a €10000 an hour, a €1000 fine is nothing, it takes me 6 minutes to work that off, so who cares? If I make €1000 a month, that's an entire month's worth of work, and so the fine will have a huge impact on me.

In Germany, this is encoded by the concept of a "Tagessatz", which is essentially how much you make per day (minus what you absolutely need to live):

https://de.wikipedia.org/wiki/Tagessatz

They don't generally do this for traffic violations or other misdemeanours, but for felonies for which the sentence includes a monetary punishment. So you are convicted to pay, let's say 45 "Tagessätze". How much that is depends on how much you make. If you don't pay, you go to jail for that amount of time.

Time is the equalizer, being roughly the same for everyone, unlike money.

(Yes there are differences in how long people live, or have left to live, but it's not clear whether those should be accounted for and they are nothing comparable to the differences in income/wealth. See Taleb on "Extremistan" https://wou.edu/~shawd/mediocristan--extremistan.html )

You haven't answered the central question, which is why you want a punishment outside of the deterrence effect.

And I've addressed the deterrence issue at length, just asserting that my model is wrong without explaining why won't cut it.

> And I've addressed the deterrence issue at length

No you haven't. You've just asserted a random formula, without any supporting evidence.

> just asserting that my model is wrong without explaining why won't cut it.

“That which can be asserted without evidence can be dismissed without evidence.” (Christopher Hitchens).

You haven't provided any evidence for you "model" (=random formula), so there is no reason to demand evidence for dismissing it. However, multiple people actually have provided that evidence and explained in great detail why your idea and formula is wrong.

Also, multiple countries have based parts of their legal systems on this model (relative fine). So if you want to figure out why you are wrong, which you are, feel free to examine the legal systems of those countries.

For example: "Ziel ist es, Menschen mit unterschiedlichem Einkommen verhältnismäßig gleich hart zu bestrafen." → "The goal is to punish people with different incomes equally hard." From the Wikipedia entry on "Tagessatz" that I pointed out to you earlier.

Outta here.

>However, multiple people actually have provided that evidence and explained in great detail why your idea and formula is wrong.

This is false. The only comment that actually purported to respond said there's an issue with an error rate in applying the fine. This is a minor problem, nowhere close to justifying a massive differential across all income levels.

>So if you want to figure out why you are wrong, which you are, feel free to examine the legal systems of those countries.

Of course, the fact that a country does something does not imply it's economically sound, and your implication of such is absurd. You've yet to give any economic rationale for "punishment" as opposed to deterrence, yet continue to cite "punishment" as a justification.

I'm happy to concede that this does, in fact, "punish people with different incomes equally hard", but since punishment is a stupid goal, this is useless.

>You haven't provided any evidence for you "model"

I provided all assumptions required to derive it; you need to disprove some explicit or implicit assumption, or agree.

> economically sound ... economic rationale

A country is not an economy. An economy serves society, not the other way around.

> yet continue to cite "punishment" as a justification.

Deterrence is one of the components of and reasons for punishment:

https://plato.stanford.edu/entries/legal-punishment/

https://www.upcounsel.com/legal-def-punishment

https://en.wikipedia.org/wiki/Punishment

...and the reasons I give very much apply to "deterrence": if committing this crime/misdemeanour will cost me 6 minutes of my life, iff I get caught, I am not deterred. At all. If it costs me a month, I probably am.

You wrote above

>The purpose of a speeding ticket is to (a) punish and (b) deter.

You've yet to give any justification of "punishment" in this context outside of deterrence, and you've explicitly claimed that punishment is distinct from the deterrence effect. Linking to various definitions of punishment is just silly.

>A country is not an economy. An economy serves society, not the other way around.

Since apparently Wikipedia links are sufficient to make points: https://en.wikipedia.org/wiki/Law_and_economics

>...and the reasons I give very much apply to "deterrence": if committing this crime/misdemeanour will cost me 6 minutes of my life, iff I get caught, I am not deterred. At all. If it costs me a month, I probably am.

If the goal is maximizing deterrence, then as above, just set a million dollar fine for everyone. You claimed that would be "disproportionate" above but gave no reason why that's more important than establishing a deterrence effect.

Again, a constant fine establishes a constant deterrence effect. This will not mean that the same percentage of people of any group will end up commiting the crime, both because their initial probability of doing it may differ and because their desires to do it may differ.

You've yet to respond to my point that demonstrates that fines will either be set too high or too high under such a system.

Here's a paper with 300 citations that lays out largely the same model I did and which you dismissed as not supported by evidence: https://www.jstor.org/stable/725557?seq=1

They actually add the enforcement cost of administering the fine, which makes sense but doesn't significantly change the conclusion.

If this were the case, then rich people everywhere else would be speeding like crazy and just paying the small fines.

That clearly is not the case, because fines are not the only thing rendered as a penalty. Driving privileges and criminal prosecution are quickly added on as behavior changes, even if it's small violations that add up.

Everyone faces the same financial, driving access, and legal risk which equally discourages everyone from driving badly, no matter how wealthy you are.

Unless you think rich people should get sentenced to twice as much time for the same crime, then altering the fine for wealth makes no sense.

It is objectively not the same financial risk for a wealthy person, if everyone pays the same fee.

No, the same way living in general is not the same for a poor or wealthy person. As I just said, finance is not the only part of the calculation nor has flat pricing led to crazy rich drivers everywhere.

By your logic, why is there a monetary cost? Rich people are not deterred by cost but by driving privilege penalties, right?

For administrative reasons to fund the system and as a first line of penalty.

Cost is a cost, regardless of how much you may care about it, but yes the larger non-financial penalties is what keeps rich people from driving however they want and shows that the system works fine as is.

> If this were the case, then rich people everywhere else would be speeding like crazy and just paying the small fines.

It's an issue, they call this affluenza.

> That clearly is not the case, because fines are not the only thing rendered as a penalty.

Sure but then if your deterrent are the others penalty, why is there the first penalty in the first place?

Yes, because it's really fair for both a billionaire and someone living on 40k a year to pay the same price (let's say 2k) for a speeding ticket. Both of those people will be impacted accordingly I'm sure.

there are less than three thousand billionaires in the whole world. they could all drive like it was a formula 1 grand prix 24/7 and it would create a barely measurable blip in traffic fatalities. somewhere between ten and fifteen percent of americans are driving without insurance. I'm a lot more worried about them than the one lambo I see every couple months.

Where did I claim you're more likely to get in a car accident with a billionaire?

There should be a punishment for traffic violations big enough to discourage the offender from repeating it. Since a couple of thousands will not cause such an effect on an ultra rich person, the punishment should be calculated in such a way that it actually does. Calculating it based off of income achieves just that.

what I'm saying is that it just doesn't matter how billionaires drive (on the rare occasion they even drive their own vehicle). billionaires speeding does not meaningfully affect your safety on the road. hitting them with a huge fine just indulges your jealousy.

There's only one driver with the HN username guptaneil in the whole world. I could drive like a maniac and I would barely create a measurable blip in traffic fatalities.

Where do I sign up to be exempted from traffic fines, since my driving doesn't have any impact anyway?

sure, and if there were a bug in the ticket processing system that made it impossible to actually charge a fine to somebody named "guptaneil" specifically, I would say it's probably not worth the trouble of fixing.

Could you expand on why you think so?

1. I'm driving at 110 kph when the limit is 100. I pay $80, but I got paid $16000 after tax this month.

2. I'm driving at 110 kph when the limit is 100. I pay $80, but I got paid $4000 after tax this month.

Fair?

Yes, that's fair. Please explain why you believe it is not fair.

1. I'm climbing a tree when I ought not to and fall and break my legs. I'm a poor construction worker which means I am now out of work.

2. I'm climbing a tree when I ought not to and fall and break my legs. I'm a wealthy programmer and just keep on going to work since my hands and brain still work fine.

Fair? Or should the tree break my hands and give me a concussion on the way down in order to level the playing field?

This is such a colossally bad take. Tickets have the distinct purpose of disincentivizing dangerous driving. They don't do that if it's a flat fare and the person breaking the speed limit is sufficiently wealthy. Thus, if you want speeding tickets to affect everyone equally, you make them proportional.

>his is such a colossally bad take. Tickets have the distinct purpose of disincentivizing dangerous driving.

Tickets are never treated as a revenue stream by state and local governments. /s

The fee is only one aspect of the ticket. The other aspect is demerits on your license which go toward revoking it. Dangerous driving is discouraged by the threat of getting your license revoked, not by getting a fine. Speeding tickets do affect everyone equally, by applying the same number of demerits toward revocation of the license. Hence why rich people don't drive like maniacs even though they can "afford" to from a purely monetary standpoint.

>> Dangerous driving is discouraged by the threat of getting your license revoked, not by getting a fine.

If so, then why not use that exclusively and get rid of speeding tickets?

income is distributed exponentially. it's a very small slice of society that can get a $500 ticket and not care. I'm sure it makes the constituents happy to jack up the fines for rich people, but there are too few of them for it to meaningfully impact road safety.

Speeding tickets do not cost $500. Most are <$100.

Despite this, it’s (judging by cars) lower income people who tend to be the idiots driving recklessly on the streets. Being passed by a shitty Honda doing 120mph is common, being passed by a new luxury car doing the same is much rarer.

Why? Probably because rich people statistically tend to have better long term thinking and lower impulsivity, which is why they’re rich in the first place.

That may be true, but only for people who made their fortunes themselves - and even then you have some amount of luck involved. It doesn't work for those who inherited their fortunes, or simply won $100M in a lottery.

> Or should the tree break my hands and give me a concussion on the way down in order to level the playing field?

This is a straw man argument. It would be a decent allegory for jail terms that favor the rich, though.

You are missing the point.

What we want is for no one to drive dangerously. To discourage this, we give tickets for speeding.

For rich people, the fine doesn't mean anything to them because it is not enough money to matter, so they have no incentive to stop speeding. They keep speeding, putting everyone in danger.

The point of a fine (at least for something like speeding) is to discourage the behavior. If you want the DISCOURAGEMENT to be equal (because a rich person speeding is just as dangerous to other drivers as a poor person speeding, so we want to discourage them equally), then the fine needs to vary based on how wealthy the driver is.

The discouragement is "demerits on your license"[1] which go toward revoking it. Hence why you don't see rich people speeding around all the time even though the they can afford to pay the fines - they don't want to lose their license.

[1] https://en.wikipedia.org/wiki/Point_system_(driving)

Except rich people do speed more: https://www.cnbc.com/2015/04/15/wealthier-drivers-get-more-t...

I think it might help to flip the argument on its head. If you are a low income person struggling to make ends meet - should you have to forego a meal or two ? Is it fair if a richer person does not have to do the same ? All things considered I’d bet you the higher wealth person still has the less impactful fine.

It's not like speeding tickets are inevitable. I've been driving for over 17 years and I've never been pulled over once (knock on wood). But sure, I don't mind proportional speeding tickets (I never get them), but I think it's a slippery slope of socialism where you start thinking everything should have proportional costs. Why should rich and poor both pay $3 for a gallon milk? Shouldn't the rich pay $30 for a gallon of milk? Heck, they are so out of touch with food costs anyway they probably wouldn't notice.[1]

[1] https://www.youtube.com/watch?v=ad_higXixRA

People make mistakes and exhibit wreckless behavior every once in a while. Unlike milk, the value of a ticket is not set by markets. It is a financial instrument used to discourage behavior. It's really not too dissimilar to a tax. We already have all kinds of progressive taxes - this really isn't much different.

> a rich person speeding is just as dangerous to other drivers as a poor person speeding

this is probably not true. if you look at accident statistics, you'll notice that more expensive, newer cars tend to get into significantly fewer accidents per mile. rich people can afford more capable vehicles and they can afford to maintain them properly.

Falling out of trees isn't governed by the laws of men, but by laws of physics. The laws of man can recognize that capitalism can be very cruel to the poor. The rich are just going to laugh off the cost of the speeding ticket and save up to buy a faster car or bigger house. If you're poor and get a speeding ticket you can't afford, the choice is between going hungry or going cold for the rest of the month. That's a cruel and inhumane and for places that recognize that, the fine for the impoverished so they don't starve. In a practical manner. Sending them off to soup kitchens when they are able to feed themselves outside of the fine that's being imposed on them, is a misuse of everybody's resources.

Neither is fair.

$4k for 10-over is the kind of fine you'd expect in a draconian dystopia that cuts off people's hands for theft.

I think it sounds like a great idea, admittedly though it is difficult for me to get my head around a system that isn't unfairly gracious to the wealthy and vicious to the poor.

All the people replying to you seem to be under the assumption that speed limits generally reflect the speeds most people find reasonable to drive in clear conditions. This is a very naive assumption to put it mildly.

That said, as someone who drives vehicles that don't exactly project an image of wealth I'd be perfectly happy with a scaled fine system since rather than getting singled out a fishing stop as a result of going 5-over in a shit car I would be more likely to be ignored in favor of someone who appears more likely to pay a larger fine.

UK had the same speeding ticket fine based on income years ago. Not sure if they still do.

Many European jurisdictions have this, a so-called day-fine. It’s a just fine, and just fine.

https://en.wikipedia.org/wiki/Day-fine

The worst part about price discrimination is that if there are a limited number of players in the market, it feels like, and maybe effectively is, price fixing.

Now, it may not play out as direct collusion, but if only one company engages in it, they won’t be competitive for their wealthier customers, so it doesn’t make much sense. But if both participants in a duopoly do it, you have no options. It wouldn’t be possible to enact price discrimination for something with lots of competition

> they won’t be competitive for their wealthier customers

Sure they will. You don't charge too much so that the customer will start feeling that its worth their time to look for alternative offers. That upper limit it usually higher the wealthier (or "spending happy") the customer is. So it totally makes sense to establish that limit individually per costomer.

Yes, the point is company can't just charge arbitrarily high price, they are still restricted by competition and the willingness of the individual to spend.

Isn’t price discrimination embedded in nearly every transaction we engage in, though?

What is the difference between price discrimination between classes of individuals (to your point, business vs leisure travellers), and individuals themselves?

Nearly every pricing guide on this site recommends offering an ‘invoiced’ pricing plan for enterprises for substantially more than the same service on credit card billing. Price discrimination at its finest and, I would argue, a good thing for suppliers to extra more of the benefit they are providing to consumers.

If the price of the Uber ride is higher than you value that ride... just don’t buy it. Otherwise enjoy the value you have extracted from Uber

No, go to amazon.com and look for your favorite product, now tell me if 10 people from different income level see that, will the price be diffferent?

Probably a very high percentage of items(90% I am pulling things out my ass) are NOT price discriminated. Food, electronics, many many transportation fares (buses, subways), you get the money you pay the same regardless of your net value or income. People love to be contrarian, that's all.

Wasn't that the whole idea of publishers attempting to ban book imports? Amazon or their suppliers do price discrimination regionally on many products I'm sure.

> If the price of the Uber ride is higher than you value that ride... just don’t buy it. Otherwise enjoy the value you have extracted from Uber

The surplus from a trade is divided between the buyer and the seller, and each party's surplus ranges from epsilon to 1-epsilon. Your claim that a move towards universally giving one party ~0% surplus and the other ~100% doesn't matter is self-consistent, but it shouldn't be surprising that society would concern itself with how surplus is divided (eg antitrust laws or any other competition-regulating policy)

It typically is not the same service. The enterprise plan typically comes with better or faster customer support, or more resources, or something.it may not always reflect the entire value of the value add. But it is rarely the same service.

I mean, do you own a nice house or car?

If you do, you've already experienced this sizing-up. A contractor comes to the house and sees you can afford 2x what they'd normally charge. A mechanic for your Lexus charges N times as much as the same mechanic would for your Toyota, even though they're the same parts and manufacturer.

Which is why you should get wage quotes over the phone.

People smart enough to price discriminate won’t give quotes that easily.

Then I don't do business with them.

Seriously, auto dealers STILL try to do this and it pissed me off to no end the last time I had to buy a car.

Except one company. I sent in what I wanted on email. They sent back the quotes on 3 cars in stock. The quotes were all reasonable and slightly below the average. I went in and bought the car.

Since then, seven other people in my social circle bought from the same auto dealer the same way. Sure, individual salesmen aren't making commissions, but that dealer is up probably up $25K in profit for roughly 15 hours mostly spent signing paperwork (it takes 2 hours just signing and signing for all the paperwork even if you walk in with financing).

Attempting to "size me up" is almost always a good way to "piss me off".

Auto dealers are selling a product that can easily be found exactly the same and compared elsewhere. For custom work such as construction, you’re not going to be able to do that.

Exactly.

Also, hourly quotes for even the most basic things around the house are a poor idea. Someone recently told me she had to move to fixed bids for everything with her handyman because he would just move really slow when it was hourly.

> Someone recently told me she had to move to fixed bids for everything with her handyman because he would just move really slow when it was hourly.

Erm, isn't the proper solution find another handyman?

If I think someone is ripping me off, "extra supervision" isn't the correct long term solution. I already distrust them, so I'm not likely to give them the benefit of the doubt. Complicated things have to run on at least some trust between parties--you can't write everything into a contract. If that trust is dead, you really can't continue the relationship.

FWIW, she didn't say it was _deliberately_ slow. Just that paying him hourly ended up costing more than his fixed bids because he worked slowly.

Similarly, the price of a venue or a band or a caterer is at least double if it's for a wedding.

When I was planning my San Francisco wedding, I told any supplier where it was feasible that I was having a family gathering, not a wedding.

(But the most important part of economically hosting a wedding is to not hire a wedding planner, it’s like their whole job is to separate you from your money. It’s a surprising amount of work to do everything yourself, but it’s the difference between a $5000 wedding and a $20,000 wedding)

Had an Audi, did the work myself. Audi parts are not VW parts just like Porsche parts are not Audi parts! I think a relay or a few hoses were shared across the car companies but nothing to write home about.. Second Audi’s are heavier than their VW counterpart so they needed stronger equipment. Made and shipped from Europe. Third, Audi had a tighter build process so a lot more work had to be done before a similar task on a VW (timing belt comes to mind). The same exists for Lexus/Toyota, Ford/Lincoln, Nissan/Infiniti.

What I’m saying is your nice house may cost 2x because your nice house has nice things that increase labor costs. Just like that upsized vehicle manufacturer..

This is exactly why I rent my dwelling and drive an inconspicuous car.

Everything about modern pricing theory -- from menu design to coupons to sales to promo codes advertised only to specific markets -- is about getting people who can pay more, to pay more, while still making a little bit of money on those can only afford the bare minimum.

A millenium ago when you bought everything haggling in the market, the rich guy was paying 3x as much as everyone else because the vendors knew they could make him. Meanwhile, the impoverished grandmother gets the unsold leftovers for free. (The specifics obviously are made-up, but you get the gist. It's still the same in much of the world today. Foreigners visiting China pay much, much much more than locals.)

This is the same human principle, just data-driven. It's kind of like progressive taxation, too: those who can afford to pay more, do.

Now you may object: Uber doesn't need the money. But it does need to be able to sustain itself long-term. So much like first-class airplane fares allow economy flights to be as cheap as they are, similarly Uber passengers with the ability to pay more are exactly what make it cheap enough for other passengers to afford at all.

I tend to agree, but think that there is a line somewhere where it become price gouging.

What if Lyft or uber have data that you have a flight to catch, are 9 months pregnant, or disabled?

> Foreigners visiting China pay much, much much more than locals.

Some years ago, I had an epiphany on the reverse-equivalent of this: foreigners visiting Switzerland pay exactly the same as locals. And it has pretty much the same effect.

This principle only makes sense if the contributions are funding a common service with a fixed cost. If there is no upper bound on the maximum cost, as is true of corporate profiteering, it is merely extraction with none of the progressive overtones as there is no longer a relationship between what you pay and the common good.

This ignores that ubers and lyfts are a bandaid on our abysmal public transit and are a play by the wealthy to corner the transportation market until they can jack up the price for their own benefit.

> A millenium ago when you bought everything haggling in the market, the rich guy was paying 3x as much as everyone else because the vendors knew they could make him. Meanwhile, the impoverished grandmother gets the unsold leftovers for free. (The specifics obviously are made-up, but you get the gist. It's still the same in much of the world today. Foreigners visiting China pay much, much much more than locals.)

Did he though? Or did he send his servant to the market for him and chastise the servant if ever he over-payed by a penny or more?

It's a real stretch to try to add a moral imperative to Uber's price gauging. Speaking of historical references, why don't we mention Uber's history alongside this rich old man of yours?

What you're referring to is the three degrees of price discrimination.

https://www.investopedia.com/ask/answers/042415/what-are-dif...

First Degree: This type of pricing strategy takes place when businesses can accurately determine what each customer is willing to pay for a specific product or service and selling that good or service for that exact price. (ie car sales)

Second Degree: Companies price products or services differently based on the preferences of various groups of consumers. (ie Costco vs Whole Foods)

Third Degree: Companies price products and services differently based on the unique demographics of subsets of its consumer base, such as students, military personnel, or seniors. (ie flights)

The purpose here is for a company to identify the maximum consumer surplus it can acquire. As commented below, this surplus also changes based on supply/demand. Supply/demand change based on competitive products or substitute products.

That is how the market works even today without Uber and Lyft too. Everyone is trying to figure out the max you are willing to pay for something. It is just that finding that out is expensive and sometimes exceeds the benefits of bigger margins. Some business like Costco on other than totally opt out of the whole guessing game and would rather offer few choices at fixed price.

Willingness to pay more also tells you a lot about the person's need and if the person is willing to pay more it is a signal that the person needs to more. Servicing those needs first is often beneficial for the whole society. For example a person traveling for an important business meeting that will help him earn lot more would be willing to pay more than teenagers going to the mall. A person trying to catch his international flight worth $$$$ might be willing to pay more than someone just going to get a haircut.

Not only this sort of differential pricing makes sense it benefits everyone without hurting others.

> Willingness to pay more also tells you a lot about the person's need and if the person is willing to pay more it is a signal that the person needs to more. Servicing those needs first is often beneficial for the whole society.

However, in this case, Uber and Lyft are not actually using willingness to pay. They are using ability to pay. To make the system more efficient, as you suggested, they would do best to implement a bidding system so that customers could directly opt to pay more (directly indicating their level of need).

The algorithms in the article would unfairly prioritize wealthier drivers over poorer ones, if used to maximize margins, regardless of the level of need of either party. Wealth (ability to pay) is not an indicator of how badly you need to be somewhere else. Willingness to pay is. Their system is flawed.

The differential pricing you've described might be beneficial to society, but the differential pricing discussed in the article is most certainly not.

> To make the system more efficient, as you suggested, they would do best to implement a bidding system so that customers could directly opt to pay more (directly indicating their level of need).

You are absolutely right here. A bidding system would do wonders IMO but they are likely to release their version of auto-bidding system that would use person's personal data to approximate the bid.

You might be mistaken that personal wealth would be a big factor. I think the target destination would be a bigger factor. For example drops to international terminals, Urgent Care, romantic dinner target locations would have a higher price rather than home, 7/11 or social security office.

If I was an engineer or product manager that is how would I design the algorithm to maximize the margins. But sooner I would move to user bid prices.

(Asking rich people to pay is not bad either, you can think of it as voluntary redistribution of wealth from rich to poor drivers).

I share the intuition that price discrimination feels wrong, but I have trouble really articulating why.

Why is "the seller would have given it to me for less" any better than "the buyer would have given me more for it"?

The problem is there is this bell curve thing. Charging rich people more sounds good and redistributory. But the really rich people have more leverage because there are so few other buyers with their purchasing power completing.

End result would probably be like super high income tax with low rate "capital gains" loophole.

I think it is similar to the frustration you'd experience if you told a taxi driver you're running late and they responded "okay, then it costs triple." It's an asshole move. Or if you told the bartender that you're celebrating getting a raise and they responded "okay, then your beer costs two bucks more." Or if there's a medicine that usually just reduces heartburn and costs $20, but you need it to survive, so they increase the cost to 90% of your life savings, just because you'll pay it. I'd say it's super dickish, but also struggle to logically articulate why.

>I'd say it's super dickish

I think that pretty much articulates how people view jacked up prices, especially (but not exclusively) in situations where people are in a tough situation through no fault of there own.

Thus, the garage owner who is known for fleecing out-of-towners who have a breakdown is far more likely to get a local reputation as sort of an asshole rather than a shrewd small businessman.

It does apply in other contexts though. for example, tickets to highly sought after concerts and sporting events are probably not as expensive as they could be. (And one result is profits flow to ticket agencies.) Look how hard it was to get tickets to Hamilton for ages. (Probably still is.) The thinking is that, if you're seen as price gouging because you can, that can work for a while but isn't a great look for a long-term relationship, to say, a band.

Can you get away with it when transactions are very occasional? Sure. But things have a way of coming back to bite you.

The more targeted the discrimination, the worse it feels. They're targeting your ability to pay, but also your weaknesses. Imagine highly accurate, pervasive, and real-time user profiling (and sharing of information among big companies), and it's not hard to imagine, in the case of Uber, being charged more the day after your paycheck clears, more if they know your specific flight arrived late, more if they know the car rental companies at the airport have low inventory, more if your selected destination is the hotel at which they know you have a reservation, only being presented with "black car" options if they know you have an upcoming business meeting, etc.

Neither is better, they're just different sides of an adversarial relationship. I think maybe the problem (and I don't know if this articulates the point well or not) is making the relationship or transaction adversarial in the first place. Adversaries are assholes to each other, hurting each other to help themselves. Generally that is thought of as bad, and you know, fuck those people.

As a thought experiment, what if we make the cab driver example be about time instead of money. Pretend it benefits cab drivers somehow to make rides take as long as possible. (I say pretend, because in most cases in the real world they would be wasting their own time as well.) So let's say you have to be somewhere at a certain time, but earlier is better. But the driver knows exactly what time you have to be there, and makes the trip take exactly that long, even though he could've gotten you there faster. You can see he's doing subpar work, doing worse for you on purpose to benefit himself.

From an efficient market standpoint, a good balancing measure would be if consumers knew exactly what it cost Uber/Lyft to provide the service. That way even if they charge you more for being rich, you can make an informed decision whether or not you want them profiting as much as they are from you.

A competitor might even find an advantage by providing that information. For example, if a car service told you exactly how much the driver made and how much the service took as a cut, you might be willing to pay more because you know where the money is going.

Why would I care how they divided their money between the platform, the driver, and the company holiday party at HQ?

I don't need nor even want to know how much Dunkin Donuts pays to make a donut or Exxon to buy, refine, and truck a gallon of gasoline to me.

Dunkin Donuts and Exxon provide all of the land, buildings, vehicles and materials their employees use to conduct business and turn a profit. Uber and Lyft not so much

More than half of Exxon's trucking is not company owned. All their filling stations are not company owned at this point (I believe that's accurate). The overwhelming majority of Dunkin locations are franchised as well. I don't care how they split the money up; I only care whether what they offer is worth the price they're asking to me.

> Yet another reason to advocate for privacy,

Take a taxi, pay with cash. Private.

I agree in theory, but in practice taxis are significantly more expensive than even Uber. And you don’t know the price upfront. I don’t think I’ve ever had a taxi experience where I was happy with the value, at least in the USA.

I get the privacy angle, but I'm failing to see the practical argument here.

A policy like the one you're imagining would have the effect of punishing those individuals who are willing to pay premiums and unwilling to "shop around" or use alternative services.

That is, it is a policy that in practice rewards the frugal and the poor at the expense of the wealthy and spendthrift. Is that... a bad thing? It sounds like a good thing to me.

I don’t like differential pricing based on personal data either. It may not be true, but I have read references to Amazon doing this: different prices based on your history. I prefer now to enter Amazon on a private browser tab and then login when I see a price. There is no way to do this with an Uber or Lift app.

This right here is already happening in pricing for Uber passes. I’ve had the first month’s pass for a dirt cheap price and then it kept increasing over the months until I discovered I was not happy paying an increasing price. So, one month I did not renew my pass and bam - the price went back to its lower default price again...

It would likely lead to people working harder to find better prices.

I moved into a nice house that was about to be foreclosed a couple of years back and after moving in, we had to get some of the same things done that we’d had at our previous home. The quotes were usually 2-3x higher for the exact same job.

This isn't all exploitative. I used to work trades and we regularly found the richer clients to be absolute PITA's about super minor details. They were the first ones to threaten not to pay unless we redid a big thing and also wouldn't offer to compensate for any phase of that.

Maybe if you charged them less they'd sweat the details less?

This doesn't make any sense... what these algorithms are doing is trying to determine how price insensitive the person is... they are trying to find a price point where, for this individual, they aren't going to make the effort to find an alternative because it is not worth the extra savings.

If this leads people to work harder to find a better price, their software isn't working right... it should be charging that person less (just lower enough to not trigger this 'find a better price' desire)

How much time a person is willing to spend to save money is going to be very proportional to how much money that person has, and this makes total sense.

The effect that I’m assuming is that this will work until people realize it’s happening. At that point, the price sensitivity will increase as a matter of opposition to price gouging.

Price discrimination happens all the time currently, already, and has forever. Whether you know it is happening or not, everyone is still going to have a different price they are willing to pay; sure, maybe people will, as a whole, care more about not paying more in the future, but how much they care will still vary between people, and that will be priced in.

Exactly. How is this not a tech version of the scam taxi drivers you encounter when traveling overseas who refuse to use the meter and try to charge you a fixed fee thats 5-10x more than a local would pay.

Charging different customers different prices for the same fare should be illegal.

Couldn’t this technically qualify as discrimination? I vaguely remember reading about how one of the big dating apps increased prices with a user’s age, but had to revert the policy because it amounted to age discrimination.

I would hope income qualifies for the same protection, but maybe not.

It does not.

Edit: Answering the very last part of the comment; it does not have the same protections.

Why not? Care to elaborate?

Sorry, I figured there wasn't much to elaborate on. Age is a protected class (after a certain age I believe, 40+ maybe?) but income is not. Price discrimination based on income/socio-economic class is one of the most commonly exploited things in business.

I think it's probably like any other decision you make on a person by person basis, like salaries. You can't use protected stuff as a factor, but you don't have to pay every employee doing that job the same amount.

Yes, it is discrimination.

I believe that you're asking whether it's legal. Also yes.

It is price discrimination but very hard to prove as one person doesn't know what another person is paying. The algorithm is proprietary.

No, income is not a protected class. If you could show that the price discrimination unduly hurts a protected class, you might have a case, but that is unlikely.

Tinder almost certainly still discriminates pricing based on age. A friend of mine signed up for two new accounts a couple months back and the account where he listed his age as in his 20s would have been half the price as for an upgrade subscription for the one where he was listed as being in his 30s.

Maybe they are using other factors, maybe he was in a different part of town when he signed up. Maybe it has to do with the school or the job listed in each account. You don’t know, and therefore you can’t prove anything. As long as the algorithms are a black box it’s hard to take a company to court over discrimination.

This is exactly what the rich need: more protection.

They're just so unfairly treated in the rest of society. It would be so unfair if Uber also discriminated against them.

Hypothetically could I open a restaurant where someone at the door made a judgement call on how much a customer could afford, and changed the prices for them on that basis?

That sounds like something discriminatory that should be illegal to me.

What is (legally speaking) a difference between "algorithm deducing how much you can pay" from taxi driver looking at your face and setting their meter accordingly to their feeling of how much you can pay? Is this legal?

Nothing, which is why taxi metering is set by the city/state, so it can't be altered (legally).

Except that cab drivers randomly setting their meters isn't a thing in any of the cabs I've ever been in, and I've lived in both NYC and London.

"Sorry my credit card machine isn't working" is usually the go-to line for on the spot pricing.

Try catching a cab in any developing asian nation. If you're white and not asking to go basically where they wanted to go anyhow, they'll just shake their head, say "no meter" and give you a highly inflated price.

You're presenting a future where there is (in the limit) no point in earning money. Lately there was a discussion about how in the future it makes no sense to buy insurance if someone is willing to sell it to you, you are always better off saving and you won't get insured if you actually need it[0].

I understand all these specific scenarios may be kinda-dismissed with some commonsensical argumentation, but has someone somewhere (in the academia?) explored how perfect information could break the economy/capitalism in some way? It looks like an interesting problem theoretically. (I don't feel like arguing either way, just would like a deeper look on this.) It's my understanding that economists actually think that perfect information should be a prerequisite/an effect of efficient markets, but did they really mean the same thing when this was formulated in the last century?

[0] this tree may make this impression https://news.ycombinator.com/item?id=21778890

> there was a discussion about how in the future it makes no sense to buy insurance if someone is willing to sell it to you, you are always better off saving and you won't get insured if you actually need it[0].

This is a misunderstanding of how insurance works. It makes sense to self-insured in expected $ value, but not necessarily in expected utility.

There's nonzero value to lowering volatility[1], and the insurance company creates surplus by coordinating the pooling of risk across many people.

For an easy example of the difference, for an easy example of the difference, I wouldn't take a 50/50 coin flip that would either cost me $1 million dollars or gain me $1.1 million; even though the expected value is $50k, because I couldn't afford such a high chance of financial ruin. I would however, sell the chance at this bet to an insurance company for $40k, and if they were large enough to absorb the loss (or bought many such policies), they would take it and gain $10k minus the (lower) value they place on the risk. (All numbers are made up, obviously).

[1] this is a simple enough concept that you can derive it graphically from a utility/$ graph, and requires only the assumption of diminishing marginal utility of $

Yeah, I wanted to give an example and disclaim redoing that specific discussion if possible. But just to provide a different view, what you're saying is fine theoretically, but in practice often people see the insurance situation as "some bad costly thing X can happen to me, I want to pay reasonable money to not have to eat the whole cost if it happens". Now if insurance companies had some super-accurate data and models on you (a futuristic perspective here), they could just infer if X will happen to you and take some free money if it won't and refuse insurance/make you pay everything plus premium otherwise. One similar case nowadays is health and old age pension, though these tend to be very regulated or state-run (i.e., tax funded). The point is that the scope of things where this applies can become very wide in the future.

Someone in the linked comment tree said "dispersion of the cost in wider population" is "not insurance, but a social solidarity scheme" and you may agree. But it's possible that we are currently running some "social solidarity schemes" only because of the imperfect information.

It would require more than imperfect information, but imperfect information _about_ the imperfect information. Ie, if people knew the insurance company had perfect information, they wouldn't buy the policy. At that point, the insurance company could just directly sell the information and still create surplus by reducing uncertainty.

This meta-imperfect information wouldn't last very long: People are generally skeptical of things like insurance as a baseline anyway, since they're unintuitive ("why am I paying for nothing every month?"). In this hypothetical world of perfect insurers, people would just sum up the anecdota of X insurance literally never paying out (and everyone rejected having X happen), and it wouldn't take very long for conventional wisdom to switch to "insurance is never worth buying".

you're grossly underestimating the absolute ingenuity of 7-10 billion people jostling against each other for status. even if people were taxed such that net income was exactly the same for everyone, higher earners would still try to claim superior status from it.

and that theoretical limit of perfect, simultaneous, accurate information is akin to the heat death of the universe, and really not worth practical (as opposed to theoretical) discussion. for all practical purposes, at the very least there are rate limits related to the propogation of and reaction to perfect info, not to mention all the ways people will actively obstruct it.

I dunno, the status appeal of money is very much what you can buy with it.

I can technically imagine stores both online (good old tracking) and brick-and-mortar (looking at clothing and subtle body cues: inferring health, psychical well-being etc. - if not matching to external data with facial recognition) being able to quote, with machine learning, higher prices for you at check-out if your financial situation is better. Now of course wealthy people spend less on such "trivial" consumption in comparison to capital investments, but for middle class this could be significant. I mean a kind of thing like this.

the rich person would just hire poor people to buy their trivial consumption items for them, both to get better prices and to put downward pressure on the practice. that's not even a particularly ingenious solution, but that's the kind of thing i mean by underestimating our collective ingenuity.

the transactional value of money is not inconsequential, but people absolutely do all kinds of (silly) things for status (see social media), moreso than just for transactional value.

Hey, we need a name for that "predictive discrimination"?

Asshole AI?

Amazon shows different prices to different people already... I sent a link to someone and stripped the tracking bit, and it was $10 cheaper for him

Then, soon, there will be Uber arbitrage: I only order food from cheep places, so I get great prices for Uber rides. Now, you can pay me to order the Uber ride for you. I get half of what you safed had you ordered the ride yourself. Deal?

(I never used an Uber and have no idea if that would work)

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