It’s 1:29 a.m. and you stare, wide-eyed and fearful, as your phone battery — green and full of promise just hours ago — slowly drains from dull yellow to angry, imminent-death red.
Why oh why did you take so many selfies? Was it worth it?
You open Uber and silently curse what seems like an impossibly high surge price. Nevertheless, given the sorry state of your phone battery, you close your eyes, imagine yourself at home and hail an Uber.
That’s the sort of situation Keith Chen, Uber’s head of economic research, promises the ride-hailing company doesn’t take advantage of, even though it totally could if it wanted to.
Chen discussed the psychology of surge pricing in a fascinating interview with NPR science correspondent Shankar Vedantam earlier this week. Among other things, he revealed that Uber knows when the battery on your phone is low, essentially keeping tabs on your battery so the app knows when to switch into low-power mode and more so that it knows you’re willing to pay more for a ride when your battery is running out.
“One of the strongest predictors of whether or not you are going to be sensitive to surge [pricing] — in other words, whether or not you are going to kind of say, ‘Oh, 2.2, 2.3, I’ll give it 10 to 15 minutes to see if surge goes away’ — is how much battery you have left on your cell phone,” Chen said.
When “that little icon on the iPhone turns red,” he went on, “people start saying, ‘Well, I better get home, because I don’t quite know how I’m going to get home otherwise.’”
“And we absolutely don’t use that to kind of, like, push you a higher surge price,” Chen quickly added. “But it’s an interesting kind of psychological fact of human behavior.”
Another interesting tidbit from Chen: People are more likely to accept surge pricing at a multiple of 2.1 than 2.0, basically because we’re suspicious of round numbers.
“When you tell someone ‘Your trip is going to be two times more than it normally costs,’ they think, ‘Wow, that’s capricious and unfair,’” he said. “Whereas if you say ‘Your trip is going to [cost] 2.1 times more than it normally does,’ [people think] ‘Wow, you know, there must be some smart algorithm in the background here that’s at work.’ It doesn’t seem quite as unfair.”