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Re:Uber drivers say rideshare surge pricing backfired on New... by yuliyp on Friday January 02, 2015 @04:43PM (#8828726)
Well the assumption of supply adjustments to meet demand in real time that is given for Surge Pricing is just unrealistic. A driver must make a commitment (hours or days before) to be available to drive at a given time. Of course they have no idea what the surge multiplier is, so they'll have to guess. As a result the number of cars on the road is driven by the _expectation_ of the multiplier, rather than the actual multiplier.

This affects the demand side too: people remember stories of people getting burned by huge surge multipliers, and as a result adjust their behavior (being more willing to call a normal cab, driving instead of taking a cab). Here again the actual surge multipliers matter less than the expectations. By providing reasonable estimates, they could set surge multipliers that would ensure a high supply of drivers and demand for them, instead of having the curves moved out of whack by overestimation.

Re:Uber drivers say rideshare surge pricing backfired on New... by aristus on Friday January 02, 2015 @04:45PM (#8828731)
This is a feature, not a bug. :) Uber has created a market with dynamic pricing, but manages to keep both ends of the transaction in the dark until the last possible moment. This information asymmetry is precisely why they are making money hand over fist.
Re:Uber drivers say rideshare surge pricing backfired on New... by aik on Friday January 02, 2015 @04:54PM (#8828784)
It's a feature, and why passengers didn't even bother.

It's a dangerous game. With the cost of ride essentially being an unknown, ranging from cheaper than a cab to many times the cost of a cab, I often wouldn't bother either. People prefer consistency in what they pay for an experience, and when it's inconsistent, I lose trust that the value will be consistent (ie. Uber for most people I believe is attractive if the experience is better or equal in cost to a cab, but terrible when the cost is significantly higher than the convenience/better experience.) At least with a cab I am (fairly) certain of the value.

Re:Uber drivers say rideshare surge pricing backfired on New... by erok on Friday January 02, 2015 @04:58PM (#8828802)
It's a "feature". :P In the same way that it is a feature that the cab driver doesn't have a permit or the proper insurance. Is this really how the new blackmarket is going to work? Do something illegal nationwide with average citizens running it and you are good to go? Maybe I am just being negative. Sorry.
Re:Uber drivers say rideshare surge pricing backfired on New... by harryh on Friday January 02, 2015 @04:51PM (#8828765)
I don't understand why this information asymmetry is more important to their profits than the network effect of controlling a very widely used marketplace?
Re:Uber drivers say rideshare surge pricing backfired on New... by omonra on Friday January 02, 2015 @05:28PM (#8828928)
I'm with you.

I think it's probably one of the 'things that could work better' but unlikely something the company makes much money from.

Re:Uber drivers say rideshare surge pricing backfired on New... by aristus on Friday January 02, 2015 @04:56PM (#8828792)
Think ebay and all its network effect pixie dust, plus the ability to name your own price.
Re:Uber drivers say rideshare surge pricing backfired on New... by harryh on Friday January 02, 2015 @10:27PM (#8829821)
What percentage of Uber's revenue comes from surge pricing?
Re:Uber drivers say rideshare surge pricing backfired on New... by yuliyp on Friday January 02, 2015 @05:06PM (#8828834)
It's a feature that optimizes for short term profit at the expense of the long term: memory of last year served to reduce demand this year, and memory of this year will serve to reduce supply in the future. Part of me wonders if they didn't tweak the surge multipliers in a misguided effort to appease drivers' expectations.
Re:Uber drivers say rideshare surge pricing backfired on New... by didddler on Friday January 02, 2015 @05:58PM (#8829054)
It appears that they tweaked surge to appease drivers, here's a conversation between an Uber driver and Uber's head of global operations.

http://imgur.com/yG5Ny1Q

It's all speculative because how they implement surge is opaque.

Re:Uber drivers say rideshare surge pricing backfired on New... by nerfhammer on Friday January 02, 2015 @06:07PM (#8829092)
Given that supply and quantity demanded seemed badly mismatched this seems like a failure of the pricing mechanism, one which would not occur in a free market
Re:Uber drivers say rideshare surge pricing backfired on New... by warfangle on Friday January 02, 2015 @04:57PM (#8828796)
I wonder if all of this could be alleviated by showing the current surge coefficient in the app...