Uber’s Psychological Tricks

The New York Times has a fascinating look into all the psychological tricks Uber (and Lyft) uses to get drivers to to keep driving:

Uber even published a study last year, using its vast pile of data on drivers’ rides and hours, finding that a “substantial, although not most, fraction of partners” practice an extreme form of income targeting when they start on the platform, though they abandon it as they gain more experience. Strict income targeting is highly inefficient because it leads drivers to work long hours on days when business is slow and their hourly take is low, and to knock off early on days when business is brisk.

The beauty of the messages that Uber sent Mr. Streeter and his fellow drivers is that the drivers need not have even had a specific income goal in mind in order for the messages to work. Some of the most addictive games ever made, like the 1980s and ’90s hit Tetris, rely on a feeling of progress toward a goal that is always just beyond the player’s grasp. As the psychologist Adam Alter writes in his book “Irresistible,” video game designers even have a name for this mental state: the “ludic loop.”

Uber, for its part, appears to be aware of the ludic loop. In its messages to drivers, it included a graphic of an engine gauge with a needle that came tantalizingly close to, but was still short of, a dollar sign.

And the ludic loop is far from the only video game feature that Uber has adapted as a way of keeping drivers on the road.

If taken in isolation, this article isn’t all that crazy, but it’s part of a bigger picture revealing a company whose executives visit karaoke-escort bars in Korea, evades law enforcement with their technology, has a hostile, sexist work environment filed with sexual harassment cases, and give the actual drivers rather shitty compensation considering they’re valued at over 60 billion dollars.

The ultimate goal of a corporation is 100% efficiency and after reading this piece, it’s clear humans are but a stopgap solution until robots start driving (and doing everything else).

Change comes from the outside.

Over at Mashable, Aaron Orendorff has a great piece on behavior economics, so he obviously talks about my favorite expert on the subject, Dan Ariely:

Not to be a killjoy, but as the Washington Post found, roughly 25% of New Year resolutions fall apart within the first two weeks. And even when it comes to our work — where money’s on the line — “70% of [management-led] transformation efforts fail.”

So what works?

“Change,” in Ariely’s words, “comes not from the inside, but the outside. If you want people to lose weight, give them a smaller plate. You have to change the environment.”

This is why free market capitalism can be so dangerous and detrimental. If you have zero intervention from the government and just let the market decide everything, you’re ensuring the rich get richer, or to use the example above, you’re encouraging people to eat as much as they can.

We need to establish a fair environment because we can’t be trusted to be fair on our own. Remember, we’re just monkeys with iPhones.

I just started Ariely’s newest book, Payoff, and it’s great.

Behavioral Economics

The Economists Who Studied All-You-Can-Eat Buffets:

New research shows that paying that much for a buffet might actually make the food taste better. Three researchers did an all you can eat (AYCE) buffet field experiment to test whether the cost of an AYCE buffet affected how much diners enjoyed it. They conducted their research at an Italian AYCE buffet in New York, and over the course of two weeks 139 participants were either offered a flier for $8 buffet or a $4 buffet (both had the same food). Those who paid $8 rated the pizza 11 percent tastier than those who paid $4. Moreover, the latter group suffered from greater diminishing returns—each additional slice of pizza tasted worse than that of the $8 group.

Behavioral economics is so interesting. I was first drawn to it through Dan Ariely’s book, Predictably Irrational.

We like to believe we make decisions based on reason and logic, but so much of what we do is based on emotions and perceptions.