Comment by KorematsuFred | Hacker News Reader

Comment by KorematsuFred | Hacker News Reader

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That is how the market works even today without Uber and Lyft too. Everyone is trying to figure out the max you are willing to pay for something. It is just that finding that out is expensive and sometimes exceeds the benefits of bigger margins. Some business like Costco on other than totally opt out of the whole guessing game and would rather offer few choices at fixed price.

Willingness to pay more also tells you a lot about the person's need and if the person is willing to pay more it is a signal that the person needs to more. Servicing those needs first is often beneficial for the whole society. For example a person traveling for an important business meeting that will help him earn lot more would be willing to pay more than teenagers going to the mall. A person trying to catch his international flight worth $$$$ might be willing to pay more than someone just going to get a haircut.

Not only this sort of differential pricing makes sense it benefits everyone without hurting others.

> Willingness to pay more also tells you a lot about the person's need and if the person is willing to pay more it is a signal that the person needs to more. Servicing those needs first is often beneficial for the whole society.

However, in this case, Uber and Lyft are not actually using willingness to pay. They are using ability to pay. To make the system more efficient, as you suggested, they would do best to implement a bidding system so that customers could directly opt to pay more (directly indicating their level of need).

The algorithms in the article would unfairly prioritize wealthier drivers over poorer ones, if used to maximize margins, regardless of the level of need of either party. Wealth (ability to pay) is not an indicator of how badly you need to be somewhere else. Willingness to pay is. Their system is flawed.

The differential pricing you've described might be beneficial to society, but the differential pricing discussed in the article is most certainly not.

> To make the system more efficient, as you suggested, they would do best to implement a bidding system so that customers could directly opt to pay more (directly indicating their level of need).

You are absolutely right here. A bidding system would do wonders IMO but they are likely to release their version of auto-bidding system that would use person's personal data to approximate the bid.

You might be mistaken that personal wealth would be a big factor. I think the target destination would be a bigger factor. For example drops to international terminals, Urgent Care, romantic dinner target locations would have a higher price rather than home, 7/11 or social security office.

If I was an engineer or product manager that is how would I design the algorithm to maximize the margins. But sooner I would move to user bid prices.

(Asking rich people to pay is not bad either, you can think of it as voluntary redistribution of wealth from rich to poor drivers).

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