Scientists Claim to Have Cracked How to Beat Uber’s Surge Pricing Algorithm

30 Oct 2015 | Author: | No comments yet »

Can Uber’s surge pricing be gamed?.

Like unpleasant weather in New England, the secret to avoiding Uber’s surge pricing – the company’s practice of upping the price for a ride at peak hours when the demand for cars outstrips the number of drivers – may be to simply wait five minutes.If you’re trying to get an Uber home on Halloween this Saturday, you’re likely to be faced with the dreaded surge multiplier that asks for twice or quadruple the regular fare. That’s one conclusion from a study of the algorithm that powers the ridesharing company’s service by researchers at Northeastern University presented on Thursday at the Internet Measurement Conference in Tokyo. Uber has long said that surge pricing is what makes its on-demand ride service work, encouraging drivers to go to more in-demand areas in order to pick up the higher price fares, which can help bring supply and demand for the rides closer together, aiding passengers.

In some cases during a surge – which often lasts less than 10 minutes and in some cases less than 5 minutes – drivers can actually drive away from the in-demand areas. “What we see is that demand drops precipitously, cars stop getting booked and drivers are just sitting there,” Professor Wilson, who teaches at Northeastern’s College of Computer and Information Science, told NPR. “If the incentive was working the way it should, you would expect there always to be an incentive for [drivers] to always move in. But in this case, the result is mixed.” The researchers tested Uber’s algorithm in Manhattan and San Francisco, creating 43 accounts that would virtually request rides from fixed points in each city, enabling them to record information about Uber drivers in the two cities.

If you’re on the border between two of these areas, you could just walk a few metres and notice a price change. “Two users standing a few meters apart may unknowingly receive dramatically different surge multipliers,” the paper said. But the researchers modelled it by emulating 43 versions of the apps, generating data from a range of cities to understand how they were being modelled. They then tested their methodology on a publicly-available database of New York taxicabs, eventually combining their own Uber data with the company’s studies and publicly available data.

According to the researchers’ data, Times Square in Manhattan is one of those corner cases. “For example, 20 pc of the time in Times Square, customers can save 50 pc or more by being in an adjacent surge area,” the researchers wrote. Uber argued the researchers’ findings didn’t show the full picture. “Contrary to the findings in this report — which is based on extremely limited, public data — we’ve seen this work in practice day in day out, in cities all around the world,” Uber spokeswoman Molly Spaeth told ProPublica in an e-mail. To get a look under Uber’s hood, the researchers created 43 fake Uber accounts in downtown San Francisco and midtown Manhattan and ordered minicabs through the service over four weeks to track the dynamics of surge pricing. “We see that around 40pc of surges only last five minutes, while about 70pc of surges last 10 minutes or less,” Dr.

But they also found that cities are divided up into different zones, so that crossing over the borders of those areas could lead to a reduction in the price. Unless time is of the essence, you’re probably better off waiting several minutes and getting a lower-cost lift. “People love the ability to push a button and get a ride quickly and reliably—wherever they are in a city. Wilson told the USA TODAY Network. “This essentially means that if you observe surge prices on Uber, your best bet is to just wait it out, because they typically don’t last long.” The research also claimed that during surge times, drivers actually leave the areas in anticipation of fewer riders, rather than flock to it as Uber has claimed.

Part of the issue, the researchers say, is that Uber has manually divided many cities into distinct surge areas – Manhattan has 16, London has 19, Boston has 9 – where prices are set independently of each other. However, Uber told ProPublica that the study data was limited and only based on public data, while their own, more extensive dataset has shown the opposite: drivers are drawn to surge areas because they can earn more. Surge pricing has also faced some criticism from drivers, who Wilson says aren’t given enough time to respond to the surges and have to deal with demand that reflects the need for rides from five minutes earlier, NPR reports. “Many drivers I know would rather rely on a steady rate where they can make a living instead of chasing the surge,” Suleman K., an Uber driver in New York City, who didn’t want his full name used because he has been driving for the company full-time for two years, told CNET.

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