18 June, 2021


Business in bitesizes

The Science Of Surge Pricing

The economics—and ethics—of surge pricing continue to be in the news, thanks to Uday Kotak’s attack on policies that act against free markets. In this context, a recent interview with Uber’s head of economic research shows how efficiently the taxi service works the system. For instance, Uber knows when a user’s smartphone battery is about to die—thanks to power-saving mode being automatically enabled. Even better, it knows that consumers are more likely to pay a higher surge price for cars as a result. It has also discovered that an arbitrary number with a decimal point works much better in convincing users to accept surge as compared to a round figure. Scientific stuff, eh?

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