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Comment by msm_ | Hacker News Reader

> Uber's surge pricing algorithm caused prices to skyrocket in the middle of emergencies like shootings. [1]

Not trying to defend corporations benefitting from tragedies, but isn't this just how a market works usually? There are only so many Uber drivers, you either get surge pricing or just no taxis are available (and scared people refreshing their phones in hope somebody picks up their ride instead of just deciding to find an alternate route)?

Of course we shouldn't save people based on their material wealth, but that's a different (and very entrenched) problem - see also healthcare etc.

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If Uber didn't surge-price during emergencies, the Uber drivers wouldn't disappear. Instead, a random selection of people would get an Uber - about as many as with surge pricing, probably - and the rest would see that they weren't available.

It's the randomness that makes it feel fair and prevents us from saving people based on their material wealth.

> If Uber didn't surge-price during emergencies, the Uber drivers wouldn't disappear.

They would disappear from Uber if they could negotiate a much better price on the curbside.

And I believe there's an entire subgroup of Uber drivers that monitors the current rates and opts to drive only when there's a good enough surge, thereby dynamically creating more supply.

Supply is much less elastic than that. For a short randomized surge of 2 hours, how many new drivers are going to actually come into the road? How many of the rides will complete at that price? How long will the surge last?

No one is dropping what they are doing and commuting an hour for a 2 hour surge. Odds are the surge won’t be present when the drivers arrive.

I only have anecdotes and it’s from Chicago (not SF where indeed a lot of drivers commute an hour to get to a high demand area) but here it’s not that uncommon for people to be able to quickly hop on or off driving on short notice. It probably rarely moves the supply needle more than 10-15% at most but that’s not completely insignificant in comparing vs a less dynamic fleet like taxis.

Theres a term for this kinda of "supply and demand" profiteering and its called price gouging and its explicitly illegal in many states so in times of emergency so you aren't suddenly getting absurd %1000 percent up charges buying basic necessities before a hurricane.

https://www.ncsl.org/financial-services/price-gouging-state-....

There's an alternative view on what some call "price gouging."

The idea is that the market is providing a strong incentive for you to figure out how to get bottled water to the disaster zone. This is wildly unpopular: people view it as capitalists profiteering off a disaster. And it's true, they are.

In response, people demand prohibition of price gouging.

But the result is a lack of product availability. For example, one study linked anti-gouging laws with limited product availability during the pandemic. [1]

To take the example of the increase in costs of goods leading to a hurricane: there is a risk that the hurricane will veer off path, and all the extra goods will just sit, unbought. The anticipation of high prices causes vendors to logistically stage larger quantities of goods to the market. Mandated 'normal' prices lead to scarcity.

So ultimately we're left with a choice: do we prevent price gouging, and content ourselves with lack of product knowing that nobody made an 'unfair' dollar? Or do we let price gouging happen, knowing it'll result in better product availability and reduce hoarding?

[1] http://journal.apee.org/index.php?title=Parte1_2020_Journal_...

In a non-psychopathic society, a bunch of benevolent counterforces kick in during a tragedy. People who have extra water share it with those who need it, and people who have extra seats in their car let others in with them.

There will always be those who view all scenarios where demand vastly outstrips supply as an opportunity to be exploited for money, no matter how tragic the situation.

I personally can't imagine charging people money to get in the car with me if they're trying to escape a gunman, and I like to think most people are the same. These laws are based on that assumption (regardless of whether or not it holds true in practice).

We're specifically referring to an emergency here. It's not "better" to have taxis around if they cost a thousand dollars. That's equivalent to them not being accessible. The goal is to get people out, but the algorithm only understands regular market operation.

These are the sorts of boring AI mistakes I'm talking about: in every other case, the market algorithm works. But suddenly, you have it price-gouging terrified customers trying to flee a tragedy. It doesn't know!

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