Uber drivers’ collective action problem
I’ve been enjoying thinking about ways for Uber drivers to game the surge pricing algorithm at Uber. I don’t know how it works, exactly, but I’m going to imagine that it’s along these lines:
- there are well-defined neighborhoods in a city. This seems to be corroborated by the way the Uber app works for both drivers and riders.
- in a given neighborhood, there are two groups: people asking for a ride who haven’t yet been picked up, and drivers looking to give a ride.
- If the number of riders is 5 more than the number of drivers, then it becomes a “surge zone” for some amount of time, say 30 minutes.
Of course, I made up the numbers 5 and 30, but I’m guessing it’s more or less of this form, and those particular values don’t matter for the rest of the discussion anyway.
So here the thing, Uber wants to keep their riders happy, but to do that they actually tend to want to avoid creating surge situations, since surge situations usually imply riders wait longer and pay more. On the other hand, Uber drivers prefer surges, since they get paid more, and sometimes much more.
That means Uber drivers have a great incentive to game the system and create artificial surges. One way they can do this is by waiting outside an area that might become surge, wait for it to become surge, and then go into that area and swoop up a rider.
But it would make a lot more sense for drivers to work together to do this. Imagine what would happen if all the drivers agreed to sit together in some central location, wait for surge pricing somewhere, and then assign people in order to go get those riders. Pretty much all the rides would become surge. Again, that wouldn’t make the riders happy, but it would benefit the drivers.
All they’d need to coordinate this is something like a walkie talkie system. Or an app. And oh, wait, such a thing already exists, and it’s called Blinkr (hat tip Alex Rosenblat). Instead of congregating in the same place, though, they had an even simpler idea, namely to turn off their Uber app, thus decreasing the local supply of drivers, then wait for surge pricing.
It’s something like an Uber strike, and it requires coordination, but I don’t think it’s illegal, right? I mean, Uber can’t fire them for doing this, since they aren’t employees, right?