Yahoo Finance Uber drivers gang up on passengers to manipulate pricing, study reveals
Uber drivers are colluding to force higher prices before they pick up passengers, new research claims.
The study, carried out by researchers at Warwick Business School and New York University, found Uber drivers in London and New York have been tricking the app into thinking there’s a shortage of cars in order to raise surge prices.
The research claims that drivers manipulate Uber’s dynamic pricing algorithm by logging out of the app at the same time, making it think that there is a shortage of cars. This pushes up prices, allowing them to log back in and take advantage of unsuspecting customers.
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Uber raises fares when there is a high demand for vehicles and a short supply of drivers available, usually in bad weather, during major events or in rush hour.
But after conducting interviews and analysing posts on the independent Uberpeople.net site — a forum for drivers — researchers claim that surge pricing may not always be what it seems.
In one exchange on the site seen by the researchers a driver says “Guys, stay logged off until surge. Less supply high demand = surge.” After another driver expresses his concern that the company may find out they’re manipulating the system, the first replies: “They already know cos it happens every week”.
But the study stopped short of blaming the drivers themselves for the situation, instead pointing the finger at Uber and their system of management by algorithms rather than people. The researchers explain that drivers feel as though they work for a system rather than a company, leading to more self-interested behaviour like the surge pricing collusion.
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“Drivers have developed practices to regain control, even gaming the system,” said Dr Mareike Möhlmann, co-author of the study and assistant professor at Warwick Business School.
“It shows that the algorithmic management that Uber uses may not only be ethically questionable but may also hurt the company itself.”
The ride-hailing company — which operates in hundreds of cities worldwide and is valued at $69bn according to Bloomberg — has endured a spate of recent controversies which led to founder and CEO Travis Kalanick’s resignation. It has also faced criticism in the past for its supply and demand pricing system, with users reacting angrily to surge pricing around terrorist attacks.
However, Uber claimed the new research is wide of the mark.
“This behaviour is neither widespread or permissible on the Uber app, and we have a number of technical safeguards in place to prevent it from happening,” a spokesman for the company said.
