# Lifestyles & Discussion > Science & Technology >  Uber Is Using AI to Charge People as Much as Possible for a Ride

## timosman

https://motherboard.vice.com/en_us/a...ble-for-a-ride




> JORDAN PEARSON May 19 2017
> 
> And now critics worry about what comes next.
> 
> Thanks to complaints from Uber drivers, who were beginning to suspect that the ridesharing company was charging customers more with "upfront pricing" but not paying drivers more in turn, on Friday Uber admitted in a Bloomberg report to using AI to find the upper limit of what people are willing to pay for a ride based on their route in 14 cities.
> 
> The revelation essentially confirms the suspicions of critics like the University of Washington's Ryan Calo and Alex Rosenblat of the Data & Society Research Institute. Together, they wrote a scathing paper that warned Uber may use vast amounts of customer data to act in a predatory mannerfor example, price gouging based on your income level or other circumstances.
> 
> This isn't quite what Uber is doing with what it calls "route-based pricing," but the end result may be the same. Basically, Uber uses all the data it has on customer behaviour along particular routes in a given city to serve people different fares based on where they're going. To get an idea of what this means in the context of income inequality, here's an except from the Bloomberg report:
> ...

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## Occam's Banana

So apart from that "public subsidy" business, what's the problem here? 

If you are offered a price for a good or service and it's not "worth it" to you (for whatever reason), then don't buy it. If it is, then do.

Let markets clear.

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## TheTexan

Uber's going to charge me what they think I am willing to pay??

There needs to be a law!  I'm writing my congressman now.

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## dannno

This is good for riders, Uber and Uber drivers.

Being able to use as much information as possible to create the greatest possible demand and price discriminate to extract the most consumer surplus will create the best customer experience and will allow Uber to pay their drivers more.

The one big issue I see with pre-determining charges for rides is that some customers like to make multiple stops to drop off friends. If the driver is going out of their way, this benefits the driver because they will get paid more but the customer will still be paying the pre-determined amount to get from Point A to Point B. But apparently nobody wants to write an article about Uber screwing themselves out of money.

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## dannno

> If you are offered a price for a good or service and it's not "worth it" to you (for whatever reason), then don't buy it. If it is, then do.


lol, you mean pay two a half times as much for a dirty taxi cab?? Yaright...

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## timosman

Libertarians walk eagerly into a trap. What if the AI was used to implement the strategy of 
"From each according to his ability, to each according to his needs"?

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## Matt Collins

> Libertarians walk eagerly into a trap. What if the AI was used to implement the strategy of 
> "From each according to his ability, to each according to his needs"?


It's ok when private industry does it (voluntary interaction), it is not ok when government does it (involuntary interaction).

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## Matt Collins

The problem is that Uber is telling the customer they are going to charge X amount and telling the driver they are getting paid Y amount. Lots of times the driver gets paid less than what the customer is getting billed for.

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## timosman

> It's ok when private industry does it (voluntary interaction), it is not ok when government does it (involuntary interaction).


The depth of your analysis leaves everybody in your preschool impressed. Even Zippy.

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## dannno

> The depth of your analysis leaves everybody in your preschool impressed. Even Zippy.


As long as Lyft and other rideshare companies can operate beside Uber, it's not an issue.

If it's that bad for drivers, then they can move to a different platform, same with riders.

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## Brian4Liberty

So, when you are in a group and need a ride, you have the "poorest" person schedule it.

And in your spare time, you request and then reject rides due to price...

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## Occam's Banana

> Uber's going to charge me what they think I am willing to pay??
> 
> There needs to be a law!  I'm writing my congressman now.


ZOMG!! Uber's reign of terror must be stopped!!




> Libertarians walk eagerly into a trap. What if the AI was used to implement the strategy of 
> "From each according to his ability, to each according to his needs"?


There is no "trap" here. Matt is right:



> It's ok when private industry does it (voluntary interaction), it is not ok when government does it (involuntary interaction).


The Marxist dictum of "from each according to his ability, to each according to his needs" is necessarily involuntary (albeit implicitly so). It might as well be stated, "forcibly extract from each according to his ability in order to subsidize each according to his needs."

Adjusting one's prices (up or down) in order to more closely match what buyers are willing to voluntarily pay is what businesses in markets have _always_ done. Indeed, this phenomenon is one of the defining characteristics of markets. Uber is just taking a more finely-grained approach to the matter.

If Uber forced people to ride and then forced them to pay for those rides on the basis of its AI-plotted "from each according to his ability" strategy, then the application of Marx's slogan would become valid. But until those conditions are met, any such analogy is just absurd nonsense. (And even if those conditions _were_ met, Uber's computers would just end up running smack into Mises' intractable "socialist calculation problem" ...)

Matt is wrong about this, though:



> The problem is that Uber is telling the  customer they are going to charge X amount and telling the driver they  are getting paid Y amount. Lots of times the driver gets paid less than  what the customer is getting billed for.


So what? So long as Uber does in fact charge the rider the amount X it tells the rider it is going to charge, and so long as Uber does in fact pay the driver the amount Y it tells the driver it is going to pay, then there is nothing wrong here. The fact that X is greater than Y is unproblematic and irrelevant.

The exchange between a driver (as seller) and Uber (as buyer) is an entirely separate transaction from the exchange between Uber (as seller)  and a rider (as buyer). As the middleman, Uber's profits derive from the "arbitrage" between these distinct transactions.

IOW: Having correctly rejected timosman's application of the Marxist precept of "from each according to his ability" to this situation, Matt ironically proceeds to (unwittingly) apply the Marxist concept of "surplus value" as a criticism of what Uber is doing ...

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## Anti Federalist

> It's ok when private industry does it (voluntary interaction), it is not ok when government does it (involuntary interaction).


No, it's not.




> for example, price gouging based on your income level


Why the $#@! does my cab driver need to know how much money I make?

In a *real* cab, paid for with *real* money, the cab driver would not even know my name, which is the way I want it and like it.

But, because I am a minority, I will get swept away in the flood of Idiot AmeriKunts falling all over themselves to embrace this nonsense, and I will no longer have a choice.

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## Brian4Liberty

> Lots of times _All of the time_ the driver gets paid less than what the customer is getting billed for.


Fixed that. Uber wouldn't exist without making money.

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## timosman

> No, it's not.
> 
> 
> 
> Why the $#@! does my cab driver need to know how much money I make.
> 
> In a real cab, paid for with real money, the cab driver would not even know my name, which is the way I want it and like it.
> 
> But, because I am a minority, I will get swept away in the flood of Idiot AmeriKunts falling all over themselves to embrace this nonsense, and I will no longer have a choice.


I don't understand how can you not see how this is good for you? The total lack of transparency of how the market functions, as no two people pay the same price for anything, is exactly out of the Communist Manifesto. I am totally reassured this will not be abused given the verbal reassurance from the market participants. 

_"If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy."_

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## Brian4Liberty

> No, it's not.
> 
> 
> 
> Why the $#@! does my cab driver need to know how much money I make?
> 
> In a *real* cab, paid for with *real* money, the cab driver would not even know my name, which is the way I want it and like it.
> 
> But, because I am a minority, I will get swept away in the flood of Idiot AmeriKunts falling all over themselves to embrace this nonsense, and I will no longer have a choice.


I'm with you. I don't have an Uber account.

Imagine the day where everything you buy is *individually* priced based upon your Google Payablity Index (TM). It will be the ultimate in social justice, comrade.

"I'll have a hamburger"

"Please look into the scanner. Thank you, that will be $12, Mr. AF. We do hope your dog is feeling better after that huge vet bill, and happy birthday too! Please come back when you can afford to make another purchase."

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## timosman

> Fixed that. Uber wouldn't exist without making money.


For the record Uber is not making any money (yet?).

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## Swordsmyth

> The problem is that Uber is telling the customer they are going to charge X amount and telling the driver they are getting paid Y amount. Lots of times the driver gets paid less than what the customer is getting billed for.


As a matter of news and information this is the useful point of the thread. If anyone is calling for government action then they don't belong on this forum.

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## Brian4Liberty

> For the record Uber is not making any money (yet?).


Would you prefer the term revenue?

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## timosman

> Would you prefer the term revenue?


Nope, but this what everybody else prefers.

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## Swordsmyth

> No, it's not.
> 
> 
> 
> Why the $#@! does my cab driver need to know how much money I make?
> 
> In a *real* cab, paid for with *real* money, the cab driver would not even know my name, which is the way I want it and like it.
> 
> But, because I am a minority, I will get swept away in the flood of Idiot AmeriKunts falling all over themselves to embrace this nonsense, and I will no longer have a choice.


Then don't use Uber.

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## timosman

> Then don't use Uber.


And once Uber becomes the modus operandi for all transport companies you can move to a different planet.

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## Swordsmyth

> And once Uber becomes the modus operandi for all transport companies you can move to a different planet.


Or use your own car. That is assuming your prognostication comes true.
What do you want done? Government action? a Mass Protest? What?

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## timosman

> Or use your own car. That is assuming your prognostication comes true.
> What do you want done? Government action? a Mass Protest? What?


How about abolishing ZIRP? Uber is burning tons of cash and the only way this is possible is cheap credit.

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## Swordsmyth

> How about abolishing ZIRP? Uber is burning tons of cash and the only way this is possible is cheap credit.


That is something we should do whether it affected Uber or not. It has nothing to do with whether you like what Uber does.

Thanks for the Neg Rep for a pro-liberty comment you statist moron.

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## timosman

> That is something we should do whether it affected Uber or not. It has nothing to do with whether you like what Uber does.


Uber's existence is a direct result of ZIRP. I am sorry if this is too hard for you to grasp.




> Thanks for the Neg Rep for a *pro-liberty comment* you *statist moron*.


I would rather prefer you kept it short without attaching two fallacies to an otherwise friendly exchange of pleasantries.

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## Swordsmyth

> Uber's existence is a direct result of ZIRP. I am sorry if this is too hard for you to grasp.


But any company could institute these policies, no matter how they were financed, ZIRP is philosophically irrelevant to the discussion.






> I would rather prefer you kept it short without attaching two fallacies to an otherwise friendly exchange of pleasantries.


Neg Rep is a pleasantry?

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## timosman

> But any company could institute these policies, no matter how they were financed, ZIRP is philosophically irrelevant to the discussion.


If it was not for ZIRP, Uber would have to fold or not even be funded in the first place. This what Ron Paul talks about when he mentions malinvestment - https://en.wikipedia.org/wiki/Malinvestment





> Neg Rep is a pleasantry?


This is rather innocuous for somebody as misguided as you are.

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## Swordsmyth

> If it was not for ZIRP, Uber would have to fold or not even be funded in the first place. This what Ron Paul talks about when he mentions malinvestment - https://en.wikipedia.org/wiki/Malinvestment


Just like a liberal, No brain, No understanding of principle, just attack anything I don't like anyway I can.





> This is rather innocuous for somebody as misguided as you are.


LOL from the guy who thinks that The government should find some way to attack a business he doesn't like.

Please Note I oppose ZIRP.

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## dannno

> Uber's existence is a direct result of ZIRP. I am sorry if this is too hard for you to grasp.


Uber would operate anyway without ZIRP, it would just be a slightly different business strategy. They would still be wiping the cab industry off the map and profiting just fine without all the cheap credit. They are just leveraging the cheap credit and doing it faster. 

Like I said, you wanna pay 2.5x the amount to a "real" cab to has to pay exorbitant fees to the government (*@Anti Federalist*) then go ahead. I prefer to get a better car and less government regulated, better service for a cheaper price to someone who can use their vehicle for personal use so it is less costly to operate. Unfortunately you have to give up your anonymity (to Uber, not the driver), but there are a lot of benefits that Uber can provide as a company to the customer by giving them their paypal account and email address.

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## timosman

> They are just leveraging the cheap credit and doing it faster.


Yeah, sure.

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## dannno

> Yeah, sure.


Dude, you are totally clueless. The existence of ridesharing increases the demand for taxi type services in an area by like 4 times at least.. probably 10 times. Nobody used to take cabs because they $#@!ing sucked. It was hard to order them, they were dirty, you had to wait 20-30 minutes for them to come to your house, that's if you could get one to your house at all. The cab drivers were rude as $#@!, they drover you all over town and charged you $60 for a ride that costs $15 through Uber or Lyft. 

Then ridesharing came along, and all of a sudden you could order a nice, clean car to your house in 5 or 10 minutes - they automatically call the closest available car, automatically text messaged you when they get there, the drivers are friendly, they don't overcharge and they are happy because they are making money because they don't give ridiculous amounts of money to the government for licenses and permits and they can use a vehicle that can easily be converted into a personal/commuter vehicle. 

I'm not trying to sell you on using the service, if you don't like it fine. But you sound like you don't know wtf you are talking about when you say the only reason these services are successful is because of cheap credit. They are successful because they got around government regulations and created a useful product utilizing a new technology (smartphones).

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## timosman

> They are successful because they got around government regulations and created a useful product utilizing a new technology (smartphones).


All the while not making a penny. DotCom 2.0

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## dannno

> All the while not making a penny. DotCom 2.0


Look at the scale, and the razor thin margins, they are competing with Lyft and other rideshare companies as well. 

You have to convince me that riders are willing to pay the $15 for an Uber, but not willing to pay $18 for an Uber and would rather buy the $60 taxi.. Because that is the type of margins we are talking about, if Uber raised their prices just a little they would be making money. But their goal is to leverage the debt and focus on marketshare. It's a longterm business strategy, it is the best strategy they can currently engage in. It would be better if the ZIRP didn't exist, but like I said it would just mean they would have to sacrifice low prices and marketshare.. it doesn't mean they wouldn't exist, that is completely ridiculous.

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## GunnyFreedom

NEWSFLASH! Hershey's sells candy bars for more than it takes to make them!!!  ZOMG!

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## Matt Collins

> Matt is wrong about this, though:
> 
> 
> So what? So long as Uber does in fact charge the rider the amount X it tells the rider it is going to charge, and so long as Uber does in fact pay the driver the amount Y it tells the driver it is going to pay, then there is nothing wrong here. The fact that X is greater than Y is unproblematic and irrelevant.
> 
> The exchange between a driver (as seller) and Uber (as buyer) is an entirely separate transaction from the exchange between Uber (as seller)  and a rider (as buyer). As the middleman, Uber's profits derive from the "arbitrage" between these distinct transactions.


It's sleazy at best and downright deceptive at worst

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## Occam's Banana

> It's sleazy at best and downright deceptive at worst


Non-repsonsive. "Sleazy" is just an empty and lazy pejorative.

As for "downright deceptive" - where is the deception?

Does Uber pay drivers what it agrees to pay them (and what drivers agree to accept)?

If so, then there is no deception involved ("downright" or otherwise).

If not, then present your evidence and make your case (instead of spouting contentless derogations).

Otherwise (as I noted in the bit you snipped out of my quote) you are just peddling a trite Marxist bugbear.

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## Anti Federalist

> Then don't use Uber.


I don't.

But because everybody else *does*, because everybody else does not give a flying $#@! about privacy, I will soon have no *choice*.

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## Anti Federalist

There is the future.

+rep




> I'm with you. I don't have an Uber account.
> 
> Imagine the day where everything you buy is *individually* priced based upon your Google Payablity Index (TM). It will be the ultimate in social justice, comrade.
> 
> "I'll have a hamburger"
> 
> "Please look into the scanner. Thank you, that will be $12, Mr. AF. We do hope your dog is feeling better after that huge vet bill, and happy birthday too! Please come back when you can afford to make another purchase."

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## Swordsmyth

> I'm with you. I don't have an Uber account.
> 
> Imagine the day where everything you buy is *individually* priced based upon your Google Payablity Index (TM). It will be the ultimate in social justice, comrade.
> 
> "I'll have a hamburger"
> 
> "Please look into the scanner. Thank you, that will be $12, Mr. AF. We  do hope your dog is feeling better after that huge vet bill, and happy  birthday too! Please come back when you can afford to make another  purchase."






> There is the future.
> 
> +rep


One would hope that without government intervention, this scheme would collapse like Obamacare. After all the rich would patronize businesses that charged a straight cost to everyone, and they have the most money to buy things and thus the most market leverage.

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## Anti Federalist

> One would hope that without government intervention, this scheme would collapse like Obamacare. After all the rich would patronize businesses that charged a straight cost to everyone, and they have the most money to buy things and thus the most market leverage.


I wish I could believe that.

But I do *not*...as I watch millions and millions and millions of people fall all over themselves to get rid of cash, carry electronic dog collars, clamor for driverless cars and festoon their own homes with surveillance cameras and commit in a hundred different ways to purchasing their own slavery.

Gotta hand it to the authoritarian controllers...they figured it out...all they needed to do is *market* "1984" better.

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## Matt Collins

> Non-repsonsive. "Sleazy" is just an empty and lazy pejorative.
> 
> As for "downright deceptive" - where is the deception?
> 
> Does Uber pay drivers what it agrees to pay them (and what drivers agree to accept)?
> 
> If so, then there is no deception involved ("downright" or otherwise).
> 
> If not, then present your evidence and make your case (instead of spouting contentless derogations).
> ...


It is deception in the fact that the driver is supposed to be getting 75% of what the customer is getting charged, but the customer is being charged more than what the driver is getting paid with Uber pocketing the difference.

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## dannno

> I don't.
> 
> But because everybody else *does*, because everybody else does not give a flying $#@! about privacy, I will soon have no *choice*.


Not Uber's fault.. the government is the one that regulated taxis so extensively that they made them prohibitively expensive for most people and most situations. I was railing against taxi regulations long before Uber came around, and told people about how if they didn't regulate cabs they would be cheaper and drunk people would use them more and you would have less problems with DUIs. Well, finally Uber came through and beat the regulations, made the trips cheaper and they have done a lot to reduce drunk driving accidents. 

I think there should be a market for regular cash fare taxis, but the problem is that the way Uber gets around the regulations is by claiming that the person is pre-hiring a private driver. Not sure how that would work with a cash transaction, but it isn't within their business model. It doesn't mean that cash taxi services are outside of the realm of what would exist in the free market, it just means currently they are prohibitively expensive and over-regulated.

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## dannno

> It is deception in the fact that the driver is supposed to be getting 75% of what the customer is getting charged, but the customer is being charged more than what the driver is getting paid with Uber pocketing the difference.


The driver gets paid based on a fare rate that is based on actual trip miles and time. They are not being deceived. The customer in some cases is agreeing to pay more, and in some cases less. 

I know since you have done some driving for them, you know that customers will often request multiple stops, and they aren't always right on the way. Uber has to pickup the cost on these fares because they have to pay the driver to go out of their way, and the customer misses paying that extra time and distance.

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## Swordsmyth

*Money-Losing Uber Says It "Mistakenly" Underpaid NYC Drivers*After recently promising to take steps to boost drivers’ wages, Uber Inc. *has admitted that, over the last two-and-a-half years, it “mistakenly” underpaid drivers in New York City.*
 The company claims it came forward voluntarily after discovering the  issue, which, considering how the company has seemingly bounced from one  PR crisis to the next, is probably a smart move. Uber's highly-paid  communications team has hopefully learned by now that _sometimes it's better to get out ahead of the story - because then you can shape it on your own terms._ A few months back, the company announced that it had – again, “mistakenly” – underpaid drivers in Philadelphia.

*Uber is, somewhat expaseratingly, the most highly valued startup in the world with a valuation of nearly $70 billion,* even though it lost nearly a billion dollars in the fourth quarter of 2016, and has been* called “a cash-burning machine” by one analyst who saw its books.*
 Here’s how it happened, according to WSJ:
“Under  the terms of its November 2014 nationwide driver agreement, Uber was  meant to take its commission, generally 25%, from U.S. drivers based on  fares after any taxes and fees were deducted. Uber said that, instead,  in New York City it calculated a higher cut using the full fare before  accounting for sales tax and a local injury-compensation fund fee.

 Uber told The Wall Street Journal it would refund the money plus interest, which comes to an average of about $900 per driver.”Uber didn’t say how much repaying the drivers would cost, but *WSJ  calculated that the total amount is probably somewhere around $45  million, or to about $900 per driver, based on an estimated 50,000  drivers.

More at:* http://www.zerohedge.com/news/2017-0...ops+to+zero%29

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## timosman

If the gig economy was such a great idea Uber should implement it in their corporate offices

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## heavenlyboy34

Meh. I typically get better service and prices from Lyft.

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