In a battle-ground of surge pricing, Uber has set the record straight by telling us some internal secrets that might actually change your perception towards surge and the extra money you pay to these aggregators.
Uber’s head of economic research, Keith Chen spilled some interesting facts about surge pricing in an interview with Shankar Vedantam on an episode of NPR’s The Hidden Brain podcast. If you’re like most people, you wouldn’t have noticed the permissions you are granting to an application once you download it from the App Store. One such permission you grant the Uber app is to constantly monitor your phone’s battery, so that it can decide when to shift gears and switch to low-power mode. And this is where the true outcome of the study lies.
It is interesting to see the results of the data that is constantly being collected from the user’s phone. Chen told Shankar that users are more likely to pay for a 9.9x surge pricing (what!??) when their mobile phone is about to die i.e their battery is low.
It doesn’t matter where you are, you just click ‘OK’ to escape being stranded after your phone dies. But, you might choose to wait for a notification from Uber and see the surge pricing go down if you have a full battery.
Here’s another interesting concept of sorts, which Chen explained.
Cab riders hate surge pricing and the effect it’s having on the cab ecosystem as a whole, but do you think that you’re more likely to take a cab if the app showed a surge of 2.1x instead of 2.0x? Well, Uber surely thinks so.
Chen says that a round figure like 2.0 will make the user think that the company is slapping the surge pricing onto them to extract more money, just because it’s raining outside. But, a random 2.1x surge would make the user think that the pricing is being decided on the basis of current supply and demand, using complex algorithms. And according to their perspective that ride is worth the 2.1x more they are paying.
Chen added that this is very important user data, but Uber promises not to exploit the information to slap unnecessary surge prices on your ride. But, now you know a little factoid that might eventually help you escape some instances of surge pricing.
