Uber and Lyft Suggest the Days of Cheap Rides Could Be Over(wired.com)
wired.com
Uber and Lyft Suggest the Days of Cheap Rides Could Be Over
https://www.wired.com/story/uber-lyft-suggest-cheap-rides-could-be-over
319 comments
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.
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.
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.
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?
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.
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.
It's not hard to build a ride sharing app.
It is, however, hard to get drivers and customers FOR your 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 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.
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.
How is building a ride sharing network not an area with high barriers to entry?
> how hard is it to build a ride sharing app?
then why are there only 2?
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.
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.
> 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.
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.
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.
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.
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.
When you have no jobs, you'll take almost break even to prevent employee loss.
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).
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.
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yeah, agree fully with this. seems like a grey legit way of squeezing people for more money based on their normal day run indulgences.
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.
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.
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.
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.
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.
> 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?
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?
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.
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.
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?
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 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.
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
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
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.
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.
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.
>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.
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.
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.
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".
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".
> 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.
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.
>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.
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.
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.
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.
>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.
> 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 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, 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 )
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, 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.
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.
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.
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.
Best way to make Rich people move out of Finland, result in loosing tax base, jobs (businesses) etc
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.
You're confusing rich people with assholes, losing assholes is not an issue.
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.
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.
[deleted]
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.
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.
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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.
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?
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.
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.
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.
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?
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?
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.
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?
If so, then why not use that exclusively and get rid of speeding tickets?
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.
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.
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.
>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
Tickets are never treated as a revenue stream by state and local governments. /s
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.
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)
[1] https://en.wikipedia.org/wiki/Point_system_(driving)
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
[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.
Except rich people do speed more: https://www.cnbc.com/2015/04/15/wealthier-drivers-get-more-t...
> 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.
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.
> 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.
This is a straw man argument. It would be a decent allegory for jail terms that favor the rich, though.
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.
$4k for 10-over is the kind of fine you'd expect in a draconian dystopia that cuts off people's hands for theft.
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
https://en.wikipedia.org/wiki/Day-fine
UK had the same speeding ticket fine based on income years ago. Not sure if they still do.
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.
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.
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
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.
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.
[deleted]
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
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?
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.
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.
> 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)
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.
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".
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.
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.
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)
(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..
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.
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?
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.
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.
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?
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.
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 $$$$ might be willing to pay more than someone just going to get a haircut.
Not only this sort of differential pricing makes sense it benefits everyone without hurting others.
Willingness to pay more also tells you a lot about the person's need and if the person is willing to pay more it is a signal that the person needs to more. Servicing those needs first is often beneficial for the whole society. For example a person traveling for an important business meeting that will help him earn lot more would be willing to pay more than teenagers going to the mall. A person trying to catch his international flight worth $$$$ 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.
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).
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"?
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.
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.
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.
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.
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.
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.
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> Yet another reason to advocate for privacy,
Take a taxi, pay with cash. Private.
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.
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.
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.
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.
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.
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.
Edit: Answering the very last part of the comment; it does not have the same protections.
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.
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.
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.
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.
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.
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.
"Sorry my credit card machine isn't working" is usually the go-to line for on the spot pricing.
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
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 $
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.
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".
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.
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.
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.
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.
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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)
(I never used an Uber and have no idea if that would work)
Honestly, it's probably for the best. Over the last decade it has become the expectation that - at the tap of a button - a taxi will appear and take you across the city (or three blocks over) for a few bucks. People need to realize that this isn't reality. The entire industry has been subsidized by VCs and desperate drivers working below minimum wage since day 1.
If, after paying drivers fairly, complying with local laws, reaching profitability etc., we find that prices are where most people can still afford to take Ubers everyday - great! If not, well, that's how things have been for ~150 years. Keep urging your city to invest in public transit and bike lanes.
If, after paying drivers fairly, complying with local laws, reaching profitability etc., we find that prices are where most people can still afford to take Ubers everyday - great! If not, well, that's how things have been for ~150 years. Keep urging your city to invest in public transit and bike lanes.
I don't understand why it's a moral imperative that people not take advantage of the VC funding subsidy? The VCs are wealthy interests looking to find a 10-20-100x exit at the end of this. I don't care if the Saudi Royal family places an enormous bet on automation over the next 10 years. Why is it for the best that all the people who use Uber not have that? I just don't understanding cheering that one of the few subsidies that is tricking down is being phased out, and I disagree with the suggestion that any of this is driving toward the end of paying drivers more.
Because it puts out of business other legitimate businesses which can’t access cheap money but that would otherwise be profitable. It can lead to a situation where a company becomes a monopoly, and at that point it can take advantage of the consumer.
From what I've heard, this industry works reliably in Eastern Europe and Asia.
Uber, or any company of this sort is not magical lifestyle company, its merely an app for a driver and a rider. This is easily replicated.
Uber became a poster child only because the barrier to enter is so high in so many western economies. There is a ton of smaller competition elsewhere.
Uber, or any company of this sort is not magical lifestyle company, its merely an app for a driver and a rider. This is easily replicated.
Uber became a poster child only because the barrier to enter is so high in so many western economies. There is a ton of smaller competition elsewhere.
It doesn't work too well in high-income countries anywhere, because cost of living is relatively high and then people don't want to pay those kinds of fares to support taxi drivers entering the industry. You don't really see this in Korea or Japan, for example. Where this kind of informal taxi arrangement happened in the US pre-Uber (e.g. New York dollar vans) it was mostly lower-income immigrant communities willing to accept a lower standard of living.
It's similar to why you don't really see, for example, maids in middle class homes in high-income countries, but those are relatively common where wages are lower.
It's similar to why you don't really see, for example, maids in middle class homes in high-income countries, but those are relatively common where wages are lower.
I have had occasion to call a taxi home after public transit has shut down [a decision I made myself knowing consequences].
When I expressed what the general cost was to my [rather cheap] parent who still lives in 1973, he was astounded. "Why are you shocked and horrified? $45 is a good deal for a 1am taxi at that distance. I cannot believe you've suddenly forgotten about inflation. If you want 1973 taxi prices, go back to 1973 or do an uber."
It appears that a latter part of my quip shall become null and void in a near future.
When I expressed what the general cost was to my [rather cheap] parent who still lives in 1973, he was astounded. "Why are you shocked and horrified? $45 is a good deal for a 1am taxi at that distance. I cannot believe you've suddenly forgotten about inflation. If you want 1973 taxi prices, go back to 1973 or do an uber."
It appears that a latter part of my quip shall become null and void in a near future.
Few bucks? You ever taken a Lyft or Uber between boroughs in New York?
I'm fine with paying taxi prices with uber and lyft experience. The taxi experience was awful. Spotty acceptance of debit cards, racism, half truths from dispatch. They were insulated from innovation for so long
It's poor competition. In cities where there is a free taxi market Uber is just like every other taxi company (so every taxi company has apps for booking, has nice cars, has pre-payment etc).
In cities with medallion systems or other artificial monopolies, you aren't going to get that.
I'm from Romania and a taxi/Uber ride is somewhere between $2 and $5, which is pretty cheap compared with other countries.
I used to ride with Uber and Bolt a lot, however they've been raising pricing during rush hour and I'm not stupid enough to not notice the bill at the end of the ride and these costs add up.
So several months back I stopped taking car rides altogether. I walk a lot, I don't mind walking 3 Km on foot. I ride my bike to and from work, which is actually more efficient than driving a car in this city. And now in winter due to weather I also use public transportation. I also have a driver's license and own my own car.
I'm not worrying about prices set dynamically. People can notice the bill and Uber is not competing just with Lift or taxis, it's competing with walking on foot, with public transport, with owning your own car and if their prices aren't reasonable, they won't survive.
I used to ride with Uber and Bolt a lot, however they've been raising pricing during rush hour and I'm not stupid enough to not notice the bill at the end of the ride and these costs add up.
So several months back I stopped taking car rides altogether. I walk a lot, I don't mind walking 3 Km on foot. I ride my bike to and from work, which is actually more efficient than driving a car in this city. And now in winter due to weather I also use public transportation. I also have a driver's license and own my own car.
I'm not worrying about prices set dynamically. People can notice the bill and Uber is not competing just with Lift or taxis, it's competing with walking on foot, with public transport, with owning your own car and if their prices aren't reasonable, they won't survive.
The minimum wage in Romania is also €446/mo or $496/mo, so ~$2.86/hr. Compare that to the federal min wage of $7.25 or California's $12/hr.
This article’s a couple months old, so it misses what I think is going to be a lot more definitive against Uber/Lyft.
That is, workers are starting to successfully unionize. Both companies have delayed it as long as possible, but it’s going to happen. And when it does, it will either burn more of their cash or up the customer cost.
That is, workers are starting to successfully unionize. Both companies have delayed it as long as possible, but it’s going to happen. And when it does, it will either burn more of their cash or up the customer cost.
Would a union be able to stop non-union drivers from signing up? It seems too easy for new workers to cross the picket line for a union to have much power here.
To clarify, in many cases it’s actually states declaring Uber/Lyft as employment. They’ve managed to stay legally bound to the terms of hiring ‘contractors’ but states like CA are putting an end to this.
Pretty crazy with Juul, WeWork, DoorDash, and Uber / Lyft all struggling (or showing their true colors) that all the things they sought to kill are coming back. Taxis, cigarettes, picking up your own food! It's amazing to me that people were having food delivered from a half mile away.
>Pretty crazy with Juul, WeWork, DoorDash, and Uber / Lyft all struggling
Given that the entire value-added of a company like Uber is getting a taxi to you slightly faster it's not surprising at all. Uber didn't make cars cheaper, drivers faster or added productivity in any other way plus they have a gigantic and expensive tech overhead, so it was never at all clear to me how they're supposed to be both competitive and more profitable than a regular bunch of taxi companies.
It's just like movie pass. As long as you have investors throwing money at you you can pretend that you're actually doing something but selling people a dollar for 75 cents isn't a business.
Given that the entire value-added of a company like Uber is getting a taxi to you slightly faster it's not surprising at all. Uber didn't make cars cheaper, drivers faster or added productivity in any other way plus they have a gigantic and expensive tech overhead, so it was never at all clear to me how they're supposed to be both competitive and more profitable than a regular bunch of taxi companies.
It's just like movie pass. As long as you have investors throwing money at you you can pretend that you're actually doing something but selling people a dollar for 75 cents isn't a business.
Of course Uber added productivity -- it enabled a bunch of people who previously were sitting on their couch doing nothing, to become paid drivers. And while Uber didn't make cars faster, they made a car TO YOU faster. Usually within 5 minutes, whereas most taxi pickups (outside NYC, etc) could easily be 15-60 minutes, if they came at all.
That’s an oversimplification. Uber’s primary innovations were social. They convinced riders that it was safe to jump into a stranger’s car, and drivers that it was safe to run an illegal taxi business. They managed to do both of these things effectively in large enough volumes to change how people think about taxis. Both of these things seem boring and normal now, but they were radical a decade ago.
that's not an innovation that captures any unique value for Uber and more of a positive externality if anything, because strangers still want to be paid and if anything customers aren't willing to pay them more than a regular taxi company.
On an economic level, if anything Uber suffers from inefficiencies because every driver being their own insurer, repairman and so on is a disdavantage compared to employment by a traditional taxi business. Which is of course why taxi drivers organise in firms to begin with. In a way, the entire sharing business model is a sort of weird backwards move that wilfully ignores the division of labour.
On an economic level, if anything Uber suffers from inefficiencies because every driver being their own insurer, repairman and so on is a disdavantage compared to employment by a traditional taxi business. Which is of course why taxi drivers organise in firms to begin with. In a way, the entire sharing business model is a sort of weird backwards move that wilfully ignores the division of labour.
That’s the billion dollar question. Uber chose to commoditize their drivers from a very early stage. This made sense when most of the drivers were actual ride shares and amateurs. As the driver population professionalized, I do wonder if Uber missed a bet to move from being an aggregator to being a platform. In the Azores, taxi drivers will hand you their card and build a relationship with you. Is there room in US cities for more specialization than UberX vs Uber Black? I don’t know, but I think it might have accrued more durable value to the Uber ecosystem if they had let the drivers build differentiated personal brands.
the value add of uber is that you can use your phone's GPS and a map to tell someone where to pick you up instead of calling up the taxi company and describing where you are. I know taxi companies are starting to implement this stuff, but they didn't seem to be in a big hurry to do it before uber/lyft showed up. I haven't tried in a while, but I bet the smaller cab companies still don't have anything like this.
even if their value add is just getting a driver to me a little faster, this isn't nothing. the difference between a five minute and a ten minute expected wait isn't just five minutes of wasted time; at the margin, it's whether the customer decides to purchase a ride at all.
even if their value add is just getting a driver to me a little faster, this isn't nothing. the difference between a five minute and a ten minute expected wait isn't just five minutes of wasted time; at the margin, it's whether the customer decides to purchase a ride at all.
I tried to take a cab exactly once, in Los Angeles. I Google searched for a number. They asked me where I was, exact address. I didn't know the exact address. Even on Google maps it took a bit to figure out the exact address. After some back and forth, they inform me that they don't operate in that location and give me the number to another company. I call the other company. They tell me the cab will be there in 20 minutes, maybe. I said, "what do you mean maybe?" I was already cutting it pretty close on a flight.
Uber had just gotten into LA a couple of months back. I downloaded Uber and within a couple of minutes, I had a ride on the way, and I could see exactly where the driver was and how long it would take to get there. Hate the company, but the product definitely added value.
Uber had just gotten into LA a couple of months back. I downloaded Uber and within a couple of minutes, I had a ride on the way, and I could see exactly where the driver was and how long it would take to get there. Hate the company, but the product definitely added value.
This is because most of them start with heavy investments.
But when time has come to make their own money they will discover it is not so easy as thought.
But when time has come to make their own money they will discover it is not so easy as thought.
With the food delivery and meal kits and stuff, they were just selling that stuff for less than it costs. I provided thousands of dollars of revenue for Blue Apron style meal kits and food delivery. As soon as they charged market rate for them, I stopped.
They weren’t try to kill anything, they just wanted a piece of the action.
If two companies that have been operating at a loss for N years simultaneously stop, is it price collusion?
There are lots of factors here that could drive a decision to raise prices: both went public this year = increased scrutiny, moviepass & wework fiascoes = decreased tolerance for bad business models, driverless experiments have failed.
But it also feels like there's a wink happening.
If the DOJ / courts takeaway is 'yes it's collusion and they're getting slapped with a company-killing fine', it has interesting implications for the ability of unicorns to operate at a loss for long periods.
Effectively banning negative unit economics for large companies would be a new chapter for the startup economy.
There are lots of factors here that could drive a decision to raise prices: both went public this year = increased scrutiny, moviepass & wework fiascoes = decreased tolerance for bad business models, driverless experiments have failed.
But it also feels like there's a wink happening.
If the DOJ / courts takeaway is 'yes it's collusion and they're getting slapped with a company-killing fine', it has interesting implications for the ability of unicorns to operate at a loss for long periods.
Effectively banning negative unit economics for large companies would be a new chapter for the startup economy.
This policy has actually been pretty great for me. Ubers that once cost $4-5 started costing $10-$15, so I started walking and taking public transportation more.
Actually ended up getting to places faster than taking Uber, since I didn't end up waiting 10-15 minutes for the Uber to work its way through traffic to me, or the extra 10-15 minutes taking an Uber would entail due to drivers missing turns or getting lost (despite having a phone providing directions right in front of their faces...).
Actually ended up getting to places faster than taking Uber, since I didn't end up waiting 10-15 minutes for the Uber to work its way through traffic to me, or the extra 10-15 minutes taking an Uber would entail due to drivers missing turns or getting lost (despite having a phone providing directions right in front of their faces...).
Prices have been more expensive than traditional taxis in my market for over a year now.
This. Clearly this has to be the stable state for these services. A taxi is naturally free to operate in a way they see fit (finding narrow strategies and routes) while an Uber is constrained by a routing system. If you find a taxi, you can expect to pay a more optimized fare considering market dynamics, while an Uber has to suffer very suboptimal requests.
In cities like Vancouver, taxis seem to spend much less time idling than Ubers in SF.
In cities like Vancouver, taxis seem to spend much less time idling than Ubers in SF.
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Likewise.
I'd say, once people stop dumping money into these companies and they can no longer operate at a loss, the real price of a ride/delivery will become clear.
It's a reasonable working assumption that "ride share" prices end up somewhere around where taxi prices are--with the possible exception of places like London where black cabs are somewhat of a premium service relative to minicabs, etc.
I don’t see how the Uber model can ever approach the price of a taxi. Traditional taxis had purpose-built vehicles, shared garages, parts bought at wholesale, and cars on duty all day every day. Uber drivers have disposable Toyotas, pay individually retail prices for insurance, maintenance, and parts, and their vehicles are usually parked. The traditional model has the advantage on cost.
The Uber model relies on an underclass whose need for cash right now overrides any concerns they might have down the line about vehicle depreciation, the consequences of operating a taxi on a consumer insurance plan, the high self-employment tax burden, health insurance or actually breaking even after taking those factors into account.
I think the Uber model has more specifically relied on massive driver incentives and high acquisition costs.
People quit when the numbers stop making sense for them, they don't always just stay in the underclass. The high cost of acquisition and incentives they did historically reflect a lot of driver churn.
People quit when the numbers stop making sense for them, they don't always just stay in the underclass. The high cost of acquisition and incentives they did historically reflect a lot of driver churn.
I'm assuming the population of dupes will eventually be depleted.
I doubt that the pool of people who are willing to trade their time and vehicle's value for a paycheck today is going to shrink any time soon.
There has been a severe drop in the quality of Uber drivers and vehicles since a few years ago, I can only surmise that they have had to relax their standards hence indicating a lack of sufficient supply.
I don't necessarily disagree although I might argue, for example, that maybe Uber drivers are willing to take a smaller cut in exchange for the flexibility they have. But you make a good argument in general that there's certainly little reason to think that Uber rides should be significantly cheaper than cab rides are given a sustainable profitable business.
Uber/Lyft offer an option for someone who is already carrying the fixed costs of owning a depreciating vehicle to come into the market part-time and do some driving for income.
They also don't have to commit to set hours.
These should have the effect of increasing the supply of drivers (not to the full extent of all ride-share drivers, of course).
They also don't have to front the capital cost of a medallion.
Ride share prices are sensitive to market demand in near real-time rather than being set by the taxi commission (in some long-term relationship to supply/demand).
Combining those effects, I can easily see ride share prices settling somewhere below taxi rates and still leaving profit for all players.
They also don't have to commit to set hours.
These should have the effect of increasing the supply of drivers (not to the full extent of all ride-share drivers, of course).
They also don't have to front the capital cost of a medallion.
Ride share prices are sensitive to market demand in near real-time rather than being set by the taxi commission (in some long-term relationship to supply/demand).
Combining those effects, I can easily see ride share prices settling somewhere below taxi rates and still leaving profit for all players.
>already carrying the fixed costs of owning a depreciating vehicle
Except depreciation and other costs are pretty heavily a function of miles rather than time. (Especially outside of the snow belt where the number of winters plays a big role in salt damage.)
>They also don't have to front the capital cost of a medallion.
That's true but how many places is that a big factor?
We can argue the details and you're right that it's hard to compare dynamic pricing to long-term negotiated fixed pricing.
But I'm not really making a case for exactly where pricing/costs will end up assuming sustainable ride-share businesses. I'm just saying that taxi fares in most markets are probably a reasonable benchmark whether or not ride-share on average settles a bit higher or a bit lower.
Except depreciation and other costs are pretty heavily a function of miles rather than time. (Especially outside of the snow belt where the number of winters plays a big role in salt damage.)
>They also don't have to front the capital cost of a medallion.
That's true but how many places is that a big factor?
We can argue the details and you're right that it's hard to compare dynamic pricing to long-term negotiated fixed pricing.
But I'm not really making a case for exactly where pricing/costs will end up assuming sustainable ride-share businesses. I'm just saying that taxi fares in most markets are probably a reasonable benchmark whether or not ride-share on average settles a bit higher or a bit lower.
There's a huge number of people who use Uber as a payday loan who are completely unaware of finance. They just need cash NOW.
The most ridiculous one I saw was a drive with a cracked iPhone 7 Plus three days after release. In my half hour ride I saw 4 overdraft notifications and 2 please pay your bill notifications. We talked about waiting in line to get the phone and how she regretted not paying $50 for the case. She was also interested in buying a lot of stuff.
Many of them will do something stupid like trade-in their car impulsively, or total it backing into a pole where mileage doesn't really matter.
A lot of them will use the Uber gas card to get gas and then drive for Lyft to get the cash. Then next month when they need money they forgot they owe Uber and now have to drive to pay off the gas debt to Uber before they can earn anything.
I've only met three people who were willing to admit using it as a payday loan, they were all grad students. Two had financial aid delays, one blew too much money on his girlfriend.
I've also met quite a few older people (usually men) with high incomes that were laid off and need quick cash. These are often singles living paycheck to paycheck on $200k in LA and they can never figure out what to cut.
The most ridiculous one I saw was a drive with a cracked iPhone 7 Plus three days after release. In my half hour ride I saw 4 overdraft notifications and 2 please pay your bill notifications. We talked about waiting in line to get the phone and how she regretted not paying $50 for the case. She was also interested in buying a lot of stuff.
Many of them will do something stupid like trade-in their car impulsively, or total it backing into a pole where mileage doesn't really matter.
A lot of them will use the Uber gas card to get gas and then drive for Lyft to get the cash. Then next month when they need money they forgot they owe Uber and now have to drive to pay off the gas debt to Uber before they can earn anything.
I've only met three people who were willing to admit using it as a payday loan, they were all grad students. Two had financial aid delays, one blew too much money on his girlfriend.
I've also met quite a few older people (usually men) with high incomes that were laid off and need quick cash. These are often singles living paycheck to paycheck on $200k in LA and they can never figure out what to cut.
> Except depreciation and other costs are pretty heavily a function of miles rather than time.
this isn't really true of most mainstream cars. as long as people perceive the 2020 civic as an improvement over the 2019 model, a 2019 civic with zero miles will be worth less (you can verify this by visiting any dealership that still has the outgoing model in inventory). this is even more true of high-end cars until you get into stuff that's truly rare.
this isn't really true of most mainstream cars. as long as people perceive the 2020 civic as an improvement over the 2019 model, a 2019 civic with zero miles will be worth less (you can verify this by visiting any dealership that still has the outgoing model in inventory). this is even more true of high-end cars until you get into stuff that's truly rare.
Sure, if I'm buying a new car I'll pay less for last year's model all other things being equal. (And the dealership will sure want to provide an incentive for me to buy last year's model.)
But if I already own a car, how long I will continue to be able to drive it is far more determined by the mileage than by how old it is within reason. This is admittedly from the perspective of someone who basically drives cars until it's no longer economically sensible to do so.
But if I already own a car, how long I will continue to be able to drive it is far more determined by the mileage than by how old it is within reason. This is admittedly from the perspective of someone who basically drives cars until it's no longer economically sensible to do so.
I think almost anyone would prefer a 5 year old car with 100K miles on it than a 10 year old car with 25K (or 10K) miles on it.
I now realize ghaff is making a different point. since they intend to drive the car until it it is not economical to maintain, the resale value doesn't really matter. this is an unusually pragmatic approach to car ownership though.
Yes, that was my point. I have never sold a car that had material resale value. (And, in fact, just donated one--which was about 20 years old.)
I do think that new computer tech-type features may be shifting the equation to make older vehicles less attractive more quickly. Although I'd argue those are probably more important for the driver than the passenger--modulo some safety features.
I do think that new computer tech-type features may be shifting the equation to make older vehicles less attractive more quickly. Although I'd argue those are probably more important for the driver than the passenger--modulo some safety features.
There's some surplus, in theory, from increasing utilization of privately-owned cars: they're a pretty huge capital investment that no one wrings 100% of the value out of. Though I don't think this counterbalances the points you bring up
The special vehicles thing is very rare. London is the only place I have ever seen it (though admittedly I have yet not been everywhere). Everywhere else, taxis are just regular cars with a meter and a taxi sticker on them.
The Crown Victoria was essentially purpose built for taxi duty, even though it was also marketed to the public.
And law enforcement variants.
They've adjusted but limo companies also used to gravitate towards the various body of frame models including other variants on the Crown Victoria. Apparently they were very attractive for high-mileage uses because of maintenance/rebuilds.
They've adjusted but limo companies also used to gravitate towards the various body of frame models including other variants on the Crown Victoria. Apparently they were very attractive for high-mileage uses because of maintenance/rebuilds.
Checker cabs were common in the US into the 1980s.
Here’s how I wish Uber pricing worked:
When I hail a ride, I say: I’m going from A to B and am willing to pay C (which Uber can recommend to me) for it.
Now if nobody responds, I increase C until they do. This way the drivers know where they are going, how much I’m paying, etc. When a driver “accepts” a ride, I see their vehicle and rating, and get to choose from the people who have accepted.
And on the other end, they bid on my ride. If I offer $20, they might ask $25 instead, and it is up to me to either accept or reject that.
I really want a system where the drivers are happy, the riders are happy, and everything is transparent and open for negotiation.
When I hail a ride, I say: I’m going from A to B and am willing to pay C (which Uber can recommend to me) for it.
Now if nobody responds, I increase C until they do. This way the drivers know where they are going, how much I’m paying, etc. When a driver “accepts” a ride, I see their vehicle and rating, and get to choose from the people who have accepted.
And on the other end, they bid on my ride. If I offer $20, they might ask $25 instead, and it is up to me to either accept or reject that.
I really want a system where the drivers are happy, the riders are happy, and everything is transparent and open for negotiation.
Drivers usually accept new rides while in the middle of driving though. Do you really want an army of distracted drivers on their phones participating in a complicated bidding process?
And, for those relatively unusual occasions where I do take Uber, I probably have zero interest in entering into an online bidding competition. And do you really want a system where you're trying to save a few dollars by getting a bid accepted by the most financially desperate drivers?
Uber is already finding the most financially desperate drivers and filtering for them only. They’re competing for the lowest price, but actually price is only one of the things I would like to be able to select for.
I definitely don't want to bid on each individual ride, but it would be cool to have a setting in the app that lets me choose between paying more for a shorter wait or waiting longer for a cheaper ride. the driver app could have a similar setting where they can adjust the tradeoff between higher fares and inconvenient endpoints.
That sounds good in theory, but it also sounds like a lot of effort!
That's how InDriver works, a fairly popular app in Latin America, originally created in Russia.
More info: https://www.businessinsider.co.za/indriver-lets-drivers-hagg...
More info: https://www.businessinsider.co.za/indriver-lets-drivers-hagg...
I'm having trouble articulating my thoughts about this. Here we have 2 companies losing many hundreds of millions of dollars per month, and everyone here is losing their minds that they want to raise their prices. Price discrimination is just the market side of progressive taxation: everyone agrees that the rich should pay more, but not when it comes to cab fares? If you don't like the price, don't pay it: Uber v. Lyft is a false dichotomy anyway and ignores all the other cabbies in the market.
> “We are focused on improving profitability in this market.”
Seems like some kind of collusive price signalling announcement to Lyft. Eg, “we’re going to up our prices, here’s your chance to do the same”.
Seems like some kind of collusive price signalling announcement to Lyft. Eg, “we’re going to up our prices, here’s your chance to do the same”.
Hopefully this bullshit opens up a new market for digital obfustication services. Pay me $100, I will show you how to save $300/yr in Uber fees by changing your digital appearance.
Or we could just regulate these practices away and save the trouble. Man I would hate having to shop around for a service like that just so I can avoid being vulnerable to price gouging.
In theory if I check both Uber and Lyft the price of one or the other should be lower since they want my business to offset their fixed costs. The price I am willing to pay Is simply the lowest price I can get for the service.
How rich I am has nothing do with it per se.
So when does it turn into price fixing when they both independently figure out how much I am willing to pay and charge the same amount?
Right now they are uncannily good at charging the same amount for the same trip. Maybe the price is already competitive?
How rich I am has nothing do with it per se.
So when does it turn into price fixing when they both independently figure out how much I am willing to pay and charge the same amount?
Right now they are uncannily good at charging the same amount for the same trip. Maybe the price is already competitive?
The article was written back in August, so are we already seeing the higher prices?
> I've noticed this. I can reliably count on Uber/Lyft to price gouge me whenever they get the chance.
Yeah but come on though, the cut the driver has to take, the cost of car maintenance, the cut Uber is entitled to for giving you a reliable service of connecting you to a driver (and co-pool-riders) and making this process smooth -- compare all of that with what a taxi used to cost, it's still pretty cheap in my opinion. Well, at least in the center city where I am (5 dollars yesterday for a ~5 mile ride, not bad).
Yeah but come on though, the cut the driver has to take, the cost of car maintenance, the cut Uber is entitled to for giving you a reliable service of connecting you to a driver (and co-pool-riders) and making this process smooth -- compare all of that with what a taxi used to cost, it's still pretty cheap in my opinion. Well, at least in the center city where I am (5 dollars yesterday for a ~5 mile ride, not bad).
Why do you assume that cost isn't being subsidized? Uber and Lyft are both still hemorrhaging money. I'm willing to bet the real cost is at least twice what you mentioned.
Yesterday it cost me $30 to go 5 miles via Uber, and I chose that over Lyft's $40. Not a busy time of day so no price surging. This is in San Francisco for a frame of reference.
Yesterday it cost me $30 to go 5 miles via Uber, and I chose that over Lyft's $40. Not a busy time of day so no price surging. This is in San Francisco for a frame of reference.
I've noticed significantly higher prices starting about ~6 months back to the point that is has actually driven me to go fewer places. It being rainy season in San Francisco has also pushed prices up to $40 or more for a ~3 mile drive some evenings. I actually canceled plans when an Uber Pool was $36 and Lyft even more than that just a few days ago. It's just not worth paying $70+ round trip to grab a drink. I'm willing to bet drivers will see some loss in revenue as a result of higher prices but that's just my opinion.
How much would it be renting a car for a day in that area?
I own a car so it's not an issue of cost but convenience. Driving downtown is just not worth it (a broken window will ruin your weekend). I bought a car for leaving the city, not for going into the city.
I'd imagine renting the car is cheaper before you take into account parking, time, and potential theft. Car break-ins here are so bad people have become blasé about it. I went looking for a news story (there are many about how problematic property crimes are in SF) but found this instead:
https://twitter.com/sfcarbreakins
I'd imagine renting the car is cheaper before you take into account parking, time, and potential theft. Car break-ins here are so bad people have become blasé about it. I went looking for a news story (there are many about how problematic property crimes are in SF) but found this instead:
https://twitter.com/sfcarbreakins
(Sorry, I'd deleted the sentence you quoted right as you replied).
I don't mind them raising prices as is needed.
I'm complaining specifically about price gouging. For example, it cost me $8 to travel from my house to a bar the other night, to meet up with some friends. Then it started drizzling, and I had to pay $40 for the ride home.
I get that they're taking advantage of temporary increased demand, but it's not a good customer experience, and next time I'll arrange another way to travel.
I don't mind them raising prices as is needed.
I'm complaining specifically about price gouging. For example, it cost me $8 to travel from my house to a bar the other night, to meet up with some friends. Then it started drizzling, and I had to pay $40 for the ride home.
I get that they're taking advantage of temporary increased demand, but it's not a good customer experience, and next time I'll arrange another way to travel.
I feel like I've seen pretty high prices in Boston lately. On the other hand I took a trip to Las Vegas and suddenly Lyft was dirt cheap again.
It seems to vary a lot. I was on a business trip to San Diego recently and airport inbound (taxi) and airport outbound (Lyft) were about the same price, albeit with the taxi ride a little shorter. OTOH, whenever I visit Raleigh, Lyft still seems about half the price of a cab.
Yeah, the prices are pretty low here in LA too. When I go to the South to visit family, Uber is so expensive.
They’re about 2.5x to 3x what they were when I first started using Lyft, and even shared rides are pricey enough and take long enough that they have no edge over government transportation in most circumstances and I’ll generally call a private cab if I’m calling a cab at all.
These days I prefer to get myself around without either, but if circumstances prevent or make that option look unattractive, I’ll generally favor government transportation over Lyft or Uber and only call a cab from one of them if I’m in a hurry.
These days I prefer to get myself around without either, but if circumstances prevent or make that option look unattractive, I’ll generally favor government transportation over Lyft or Uber and only call a cab from one of them if I’m in a hurry.
Prediction: this is going to lead to an antitrust investigation at some point. In fact, it may present a catch-22 from a pricing algo perspective:
a) the algos don't collude, but simply adjust driver "supply" in particular geos across each other's platforms via surge adjustments until they act like they are colluding; or
b) the algo designers try to make their algos not collude and they inadvertently use data from the other platform that is nonpublic or in a way that can be determined to harm consumer welfare.
Both a) and b) create a situation where every pricing decision by the algorithm - in every city, across every driver/rider interaction - has to be done in a way that is not collusive. All the DoJ has to do is find an anomalous pricing pattern - which isn't hard - and then pin both these companies with a fine and onerous compliance regulations. Ironically enough, this may be what kills them.
a) the algos don't collude, but simply adjust driver "supply" in particular geos across each other's platforms via surge adjustments until they act like they are colluding; or
b) the algo designers try to make their algos not collude and they inadvertently use data from the other platform that is nonpublic or in a way that can be determined to harm consumer welfare.
Both a) and b) create a situation where every pricing decision by the algorithm - in every city, across every driver/rider interaction - has to be done in a way that is not collusive. All the DoJ has to do is find an anomalous pricing pattern - which isn't hard - and then pin both these companies with a fine and onerous compliance regulations. Ironically enough, this may be what kills them.
The day cheap rides are over is the day that uber and lyft are over.
And walking everywhere will become the norm?
Not necessarily, cheap rides are the only competitive advantage both of them have.
More and more companies without the massive VC support Uber and Lyft have will pop up fragmenting the market.
More and more companies without the massive VC support Uber and Lyft have will pop up fragmenting the market.
Right now, I take them because most of the time they're more convenient than cabs. (The one common exception is departing from airports when a line of cabs is right there. I also pre-book cars to and from my home airport.)
That said, absent their price advantages because of subsidies, I don't doubt a more fragmented market would probably arise.
That said, absent their price advantages because of subsidies, I don't doubt a more fragmented market would probably arise.
Juno was a great model...
Most taxi companies were still in business the last time I checked.
Surprise! Now that they've mostly killed off taxi companies, their rates will be the same as taxi companies. Who could've seen that coming? Oh wait.
One could argue, and I will anecdotally, that these companies have brought a much higher standard of service into an industry renowned for providing terrible (at best) service.
So if the outcome is that the price has fluctuated back to the norm, but the service provided is of a higher quality, then the consumer has won.
What will be interesting to see is what consequences will arise from a corresponding drop in demand when met with the normalisation of prices to the previous mean. Especially given that you can't actively chose between the drivers available to you through these apps i.e. if there's less demand, supply will likely drop to meet demand (drivers don't want to be sitting around all evening, or just doing 1-2 gigs per night), and there's no way for the cream of the crop to come to the surface amongst their competition by way of superior service and hence selective demand / consumers.
Intuitively, maybe it will result in harsher ratings from consumers (expecting better service given higher prices) which, with sufficient accumulation, may take lower quality drivers out of circulation and leave those deemed to be best in the marketplace.
So if the outcome is that the price has fluctuated back to the norm, but the service provided is of a higher quality, then the consumer has won.
What will be interesting to see is what consequences will arise from a corresponding drop in demand when met with the normalisation of prices to the previous mean. Especially given that you can't actively chose between the drivers available to you through these apps i.e. if there's less demand, supply will likely drop to meet demand (drivers don't want to be sitting around all evening, or just doing 1-2 gigs per night), and there's no way for the cream of the crop to come to the surface amongst their competition by way of superior service and hence selective demand / consumers.
Intuitively, maybe it will result in harsher ratings from consumers (expecting better service given higher prices) which, with sufficient accumulation, may take lower quality drivers out of circulation and leave those deemed to be best in the marketplace.
They did not win based on their "higher standard of service", but based on their price, which was only possible due to their non-compliance with regulatory requirements.
The service they provide is at least an order of magnitude better than what the taxi companies used to provide, though.
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inevitable. After spending the last year or two without a car at all, in part 'cause lyft and uber had started subtly raising prices, I bought a car a few months back.
I mean, I was a little sad, it was really really nice being driven everywhere... but fundamentally, I'm not quite rich enough to pay market-clearing prices to get driven everywhere. My own impression was that for the last few years, softbank has been subsidizing my own luxury rides, which was really nice! but it was also obviously not sustainable.
my own observation all along was that a lot of the price variation was "specials" - it used to be I could count on some discount several times a week. the biggest price increase I experienced, the one that pushed me to buy my own car, was seeing fewer of these.
Interestingly, now that I have a car and only use uber/lyft when drinking or otherwise away from a car, I get more discounts and specials again.
From talking to drivers, it's similar for them; a significant amount of their income consists of specials, for doing X drives in Y time period.
I mean, I was a little sad, it was really really nice being driven everywhere... but fundamentally, I'm not quite rich enough to pay market-clearing prices to get driven everywhere. My own impression was that for the last few years, softbank has been subsidizing my own luxury rides, which was really nice! but it was also obviously not sustainable.
my own observation all along was that a lot of the price variation was "specials" - it used to be I could count on some discount several times a week. the biggest price increase I experienced, the one that pushed me to buy my own car, was seeing fewer of these.
Interestingly, now that I have a car and only use uber/lyft when drinking or otherwise away from a car, I get more discounts and specials again.
From talking to drivers, it's similar for them; a significant amount of their income consists of specials, for doing X drives in Y time period.
Gee, maybe it could be a good idea to order a Taxi instead of a Uber.
When the investors stop propping up Uber and Lyft, both will collapse like they've never been, leaving both investors and drivers high and dry. While the company managers laugh all the way to their banks.
When the investors stop propping up Uber and Lyft, both will collapse like they've never been, leaving both investors and drivers high and dry. While the company managers laugh all the way to their banks.
Solidarity. Noice. Didi / Ola are still subsidizing. I can't remember the exact pitch but an Uber driver pitched me the other day on a Didi deal to install the app that was insane.
Rideshare can be profitable for everyone just like Craigslist is. The problem is that Uber and Lyft decided they were large enterprise with a SMB profit model. You could gut 80% of either and if all you had left was drivers making good wages and the service fees for using the app to support the backend you'd be sitting in a lucrative spot. Yet both companies jumped in way too far and way too early. R&D at Uber hasn't delivered and they've continued to burn cash. WeWork, Uber, Lyft - all built on a greed model. Most drivers that I've talked to in the last few months complain how their pay stays the same or goes down and the ride prices continue to increase. These companies are like cancer: just there to take as much as they can and hopefully steamroll the real drivers that bootstrapped them into autonomous ride services. If Uber/Lyft fail someone else will come back around to pick up the key pieces that can work. But for now your "cheap rides are over" - because Uber and Lyft have decided that is the answer to the problem they've created.
Don't know why you're getting downvoted - this is exactly the correct analysis - the only missing part of the jigsaw is the pension crisis that will get triggered, when the investors in that sector don't get the returns they've been promised.
They already charge more than a regular yellow cab in New York. Hopefully this price hike will inspire folks to turn back to the cheaper local option.
I realize I'm in the minority on this, but I think both of these companies will be gone 5 years from now.
Do they feel like they've put enough taxi companies out of business that they can now raise heir rates?
This just feeds the blackmarkets for any industry. When people get wise they turn to the black market.
I think it is still a race to the bottom while you can get all rideshare prices in google maps.
> more precisely predict what riders might be willing to pay for a ride
It's weird to me that this sort of price discrimination is legal.
E.g. given this information, my incentive as a rider is to never tip (so that their algorithm doesn't identify me as "willing to pay" more). Maybe I could also make a new Lyft account every time I need a ride?
It's weird to me that this sort of price discrimination is legal.
E.g. given this information, my incentive as a rider is to never tip (so that their algorithm doesn't identify me as "willing to pay" more). Maybe I could also make a new Lyft account every time I need a ride?
> > more precisely predict what riders might be willing to pay for a ride
> It's weird to me that this sort of price discrimination is legal.
I don't interpret this as charging different customers different prices per se. But there are different prevailing conditions with different pricing justified (other than simple congested/not congested). Knowing what your service is worth to customers so you can extract a greater fraction of this is pricing 101.
> It's weird to me that this sort of price discrimination is legal.
I don't interpret this as charging different customers different prices per se. But there are different prevailing conditions with different pricing justified (other than simple congested/not congested). Knowing what your service is worth to customers so you can extract a greater fraction of this is pricing 101.
> I don't interpret this as charging different customers different prices per se.
Based on my experience Lyft and Uber charge different prices to different customers with identical trips. I've tested this by asking friends with who I'm about to share a ride with to request the same trip as me, and compare prices. We've observed differences of 10-20%.
> Knowing what your service is worth to customers so you can extract a greater fraction of this is pricing 101.
Where this becomes problematic is in the age of big data. When a company can build an accurate profile of me, they can extract maximum prices from me. We need laws that mandate what definition of "profile" is allowed to be used for pricing.
I'm not sure why we accept price discrimination at the individual level for airlines and Lyft/Uber. I'm pretty sure people would be outraged if Amazon started price discriminating based on your purchase history.
Based on my experience Lyft and Uber charge different prices to different customers with identical trips. I've tested this by asking friends with who I'm about to share a ride with to request the same trip as me, and compare prices. We've observed differences of 10-20%.
> Knowing what your service is worth to customers so you can extract a greater fraction of this is pricing 101.
Where this becomes problematic is in the age of big data. When a company can build an accurate profile of me, they can extract maximum prices from me. We need laws that mandate what definition of "profile" is allowed to be used for pricing.
I'm not sure why we accept price discrimination at the individual level for airlines and Lyft/Uber. I'm pretty sure people would be outraged if Amazon started price discriminating based on your purchase history.
I think that statement was about riders in the collective sense. Riders are typically willing to pay more, e.g. on New Years Eve than on a random afternoon.
But, in any case, dynamic pricing at both the individual and the collective level is pretty widespread these days. By and large--there are some exceptions--companies don't have to sell at a fixed price to all people at all times.
But, in any case, dynamic pricing at both the individual and the collective level is pretty widespread these days. By and large--there are some exceptions--companies don't have to sell at a fixed price to all people at all times.
does this work both ways? can we get cheaper prices if we are not willing to pay more and when it is not very busy.
Oh yeah, back to the black cabs then :)
"When will these darlings of Silicon Valley begin to turn a profit?"
The funny thing is criticism of these two companies has been vociferous on Hacker News since the very beginning. I'm not sure what company I'd even call a darling. Every example I can think of FAANG, Dropbox, Slack, etc all have various criticisms. Perhaps Spotify? But it's not a Silicon Valley company.
The funny thing is criticism of these two companies has been vociferous on Hacker News since the very beginning. I'm not sure what company I'd even call a darling. Every example I can think of FAANG, Dropbox, Slack, etc all have various criticisms. Perhaps Spotify? But it's not a Silicon Valley company.
It feels like Dropbox and Slack have been spoken of positively more often than not. And I'd say Stripe, Twilio, and various other B2B "Infrastructure" companies seem to get the warmest response.
You're right though, if HN is at all representative of Silicon Valley, Uber and Lyft are hardly its darlings.
You're right though, if HN is at all representative of Silicon Valley, Uber and Lyft are hardly its darlings.
I've been on a SharkTank binge just for fun, and one thing I notice is, every time a Silicon Valley company goes to pitch, the idea has some pretty bad problems:
1. The margin is high but the idea is easily copied
2. A ton of money has already been invested, and still not making money
3. Other things I can't remember at this moment
I think SV has some sort of problem when it comes to starting businesses. Rarely something is organically growing. It's like SV people just throw money at a wall until something sticks, so it explains the thousands of failure companies.
Seeing SV companies through the eyes of an investor, I'd be ultra cautious. Companies and ideas are a dime a dozen there from what I see. Until you find out each has had +$100,000 pumped into it various ways and operating at a loss. It's almost like they want to force you to think the idea is good because "look, it's existed for X years!".
1. The margin is high but the idea is easily copied
2. A ton of money has already been invested, and still not making money
3. Other things I can't remember at this moment
I think SV has some sort of problem when it comes to starting businesses. Rarely something is organically growing. It's like SV people just throw money at a wall until something sticks, so it explains the thousands of failure companies.
Seeing SV companies through the eyes of an investor, I'd be ultra cautious. Companies and ideas are a dime a dozen there from what I see. Until you find out each has had +$100,000 pumped into it various ways and operating at a loss. It's almost like they want to force you to think the idea is good because "look, it's existed for X years!".
The go big or go home mindset is useful for specific kinds of investors. If you have 100+ million your not going to notice the returns if you’re a partner at a modestly successful restaurant.
Yes the odds are terrible that you happen to fund the next Google. But, the allure is the same thing that gets people to play the lottery even with negative expected returns.
Yes the odds are terrible that you happen to fund the next Google. But, the allure is the same thing that gets people to play the lottery even with negative expected returns.
You shouldn’t be using SharkTank to form your view on Silicon Valley...
Some of the worst companies get on there, SV or not. Think about it, why would a good company need to go on Shark Tank? They can raise from much better investors if it was a good company.
Some of the worst companies get on there, SV or not. Think about it, why would a good company need to go on Shark Tank? They can raise from much better investors if it was a good company.
Some small number seem to appear on SharkTank primarily for the free TV exposure. That seems a viable strategic move.
I'm not using solely SharkTank...Sorry if I gave the wrong impression.
Yes I completely agree with everything you're saying. ST definitely attracts certain kinds of companies with monetary needs.
Yes I completely agree with everything you're saying. ST definitely attracts certain kinds of companies with monetary needs.
This is untrue. Without a doubt, with autonomous vehicles, efficient energy usage, storage and harvest via non eco damaging sources like solar power, the cost of rides will get cheaper.
Sure but they need to stay solvent until then
If they don't remain solvent then theoretically the IP would be bought by a solvent corporation that wishes to fill the void.
That is of course unless Uber asks way too high of a price.
That's basically what happened with the Yahoo auction
That is of course unless Uber asks way too high of a price.
That's basically what happened with the Yahoo auction
Yes but I'm sure Uber would rather raise prices now and keep their IP so they can print money with autonomous vehicles later
Autonomous vehicles in cities aren't even close. And if they exist, then all the capital and operational expenses of ownership - which they've been fooling drivers into paying -- are theirs.
Why should we expect Uber and Lyft to be the first to solve autonomous vehicles, rather Google/Tesla/a startup that is completely dedicated to self-driving?
Costs don't dictate prices.
They do indirectly. A big gap between costs and prices invites competition, which lowers prices. Part of the "play" that ride sharing companies are making is building a moat around themselves so that they'll be able to discourage competition for a while.
[deleted]
They do for commodities, which transportation in this case generally is.
a bit optimistic i think. the algorithms are already being tuned to "whatever riders are willing to pay" while uber and lyft are incentivized to make as much money as possible.
We're probably 10+ years from any of that paying dividends for Uber and Lyft.
It would not work in some areas due to the collective demographical mindset: having said that; Uber simply does not utilize a very obvious solution that would Greatly increase revenue without raising fares for riders.
Insofar as what they burn on being the peeps that figure out self driving cars... I mean that's looking to hit the sweepstakes. Chances are They won't be the ones to cash in that particular ticket.
Insofar as what they burn on being the peeps that figure out self driving cars... I mean that's looking to hit the sweepstakes. Chances are They won't be the ones to cash in that particular ticket.
> Uber simply does not utilize a very obvious solution that would Greatly increase revenue without raising fares for riders.
Downvoting me??...
1) Stop making the ride App free. Charge $2.99 payable with the first ride.
2) Stop letting people sign up to drive for free. Charge $9.99 to sign up.
3) Start UberPay... sell prepaid rides for a discount then Lend that money out via Uber Credit Cards to select peeps--> like the drivers.
4) No shot I'd share this idea. This is One is The Obvious idea I mentioned in my Parent post.
Cheers
Downvoting me??...
1) Stop making the ride App free. Charge $2.99 payable with the first ride.
2) Stop letting people sign up to drive for free. Charge $9.99 to sign up.
3) Start UberPay... sell prepaid rides for a discount then Lend that money out via Uber Credit Cards to select peeps--> like the drivers.
4) No shot I'd share this idea. This is One is The Obvious idea I mentioned in my Parent post.
Cheers
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?