Steaks on a Plane, New Life for Bankrupt Bahamas Baha Mar, and the Truth Behind Uber’s Surge Pricing?

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About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. If you are patient and keep rejecting the Uber surge pricing, usually it will go away (or at least down) within 10-15 minutes.

  2. I’d also heard a rumor that Uber keeps track of how often and frequently you accept the surge pricing, then they offer you more surge pricing based on your past willingness. That’s pretty bogus, if you ask me. But, there is another app that shows you where Hoover is currently searching and where to move so that you can be out of the surgeon’s own. It has been pretty handy, sometimes allowing me to move merely a block or two in one direction to be out of the zone.

  3. @ Gary – I remember (quite a while ago) when I complained of UBER’s surge pricing as just price gouging in another name, you (nicely) scolded me by saying that the economic theory behind it is sound.

    You and I differ in our economic ideology, but the results that come from this study (and many more to come) were exactly what I predicted, because the theory – increased demand leads to higher prices leads to reduced demand and market equilibirium – assumes that these actors (the passengers AND the drivers) are behaving in economically rational ways.

    The reality is that a driver won’t just get on the road because the price goes up, any more than a passenger will pay accordingly if it’s pouring with rain. The reality is that to get a driver on the road at midnight in the pouring rain is going to require more than simple cash in the hand. The reality is that surge pricing is designed to make UBER more money when demand is high, not to provide the consumer with more service at peak times.

    In the same way that many poor people on food stamps may vote for a Republican who is against same sex marriage rather than a Democrat who vows an increase in their benefits, or a hedge fund manager may vote for a Democrat who fights for environmental laws rather than for a lower tax rate, standard (dated) microeconomic theory looks increasingly inaccurate. Humans are not rational, and money isn’t everything.

  4. @Joe – In the interests of fairness I share that there’s one study, lacking a whole lot of data but a study nonetheless, that suggests a different conclusion. I’m highly skeptical of the study, and don’t think it shows what most people claim, but it’s important to ground in facts.

  5. Thanks, Gary. I don’t disagree that the jury is still out, but I maintain that surge pricing during peak times will (a) not lead to more cars on the road and (b) (as a logical conclusion) lower prices as supply meets demand. Rather, surge pricing at peak times will remain in effect no matter how many more cars are on the road, as long as passengers are willing to pay. That, to me, is simply a dynamic pricing, and no different from what airlines and hotels do.

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