The Pitfalls of Pricing Algorithms
by Marco Bertini and Oded Koenigsberg
ON JUNE 3, 2017, blue lights flashed toward London Bridge as police cars responded to reports of a terrorist attack. They blazed past thousands of people who were enjoying a Saturday night at restaurants and pubs in the area. Many of those who were out on the streets, sensing danger, attempted to order an Uber and head home to safety. But for 43 minutes after the first emergency call came in at 10:07 p.m., Uber’s dynamic pricing algorithm caused rates in that part of the city to jump more than 200%.
The London episode is just one of many troubling examples of Uber’s price surges during moments of collective anxiety. Similar spikes occurred during a 2016 bombing in New ...
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