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A clear case of adverse selection in the old pricing model. From a game-theoretic perspective in a gig marketplace you don’t want jobs that are strictly better

A clear case of adverse selection in the old pricing model. From a game-theoretic perspective in a gig marketplace you don’t want jobs that are strictly better, else sophisticated market participants (workers) will select the best ones leaving chaff - and a worse experience - for the less sophisticated participants. What you are looking for is preference optionality, eg one Uber driver might prefer not to do very long trips, another might prefer it, and you ideally get paid fairly for either. In this case as others have noted, it doesn’t actually sound like an unfair change. Perhaps communications could have been better though.

biftek 2y ago
No, you ideally want all the jobs to be good. With the old model it was clear what the floor for getting something delivered was. Target could have instead adjusted order minimums or shrunk delivery zones instead. Gamifying peoples livelihood is the problem.
- theptip 2y ago
  > you ideally want all the jobs to be good That is… exactly the point I made, when I said: > you don’t want jobs that are strictly better Preference optionality is widely stated to be one of the features that gig workers like about the arrangement. The options you suggest are also valid ways of homogenizing the jobs to reduce variance. > Gamifying peoples livelihood is the problem To be clear Game Theory applies to all economic interactions. Mechanism Design is the branch of Game Theory pertaining to market design to achieve desired outcomes, such as “avoid adverse selection in my gig work marketplace”. Gamification is a specific application of video game design to economic interactions, it’s unrelated to what I’m discussing. (Examples of Gamification would be gaining experience points and levels for delivery, daily checking rewards, achievement badges, etc. - the general goal in Gamification is setting up a dopamine loop to encourage repeat use of the app. Hopefully it’s clear this is not what I was talking about.)
  - mistrial9 2y ago
    applied Game Theory in real human history a.k.a. wealth-building, has shown that the biggest empires with the most wealth and the best armies are built with slavery. So slavery did win, again and again and again. I don't think most modern people have any idea how deep and wide the history of slavery is .. Game-theory is fun when you get good at it for designing markets and products, but let us not lose sight of the crucial discussion.. human beings with real lives are not equal to economic parts.
    - renewiltord 2y ago
      Obviously bullshit since the US has no slavery and became a world empire 100 years after abolishing slavery.
      - mistrial9 2y ago
        pre-Industrial revolution .. miraculously, formal slavery was disbanded widely only after industrial production and agricultural labor was industrialized.. no?
      - tacocataco 2y ago
        > The Thirteenth Amendment (Amendment XIII) to the United States Constitution abolished slavery and involuntary servitude, except as punishment for a crime. https://en.m.wikipedia.org/wiki/Thirteenth_Amendment_to_the_United_States_Constitution https://en.m.wikipedia.org/wiki/Thirteenth_Amendment_to_the_...
russdill 2y ago
We are entering an era where corporations have perfect data. They can charge each customer exactly the maximum amount possible, and pay each worker the exact minimum amount possible
- brokenmachine 2y ago
  This is very insightful. I knew there was something wrong with the whole thing but that explains it exactly.
- robocat 2y ago
  > They can charge each customer exactly the maximum amount possible The company captures the consumer surplus. Generally currently we often get way more value than we pay for. We hate having that surplus taken away from us and we hate being charged what something is worth to us. Two questions: How do we fight back? Is it unfair that we pay the amount that something is worth to us individually? Currently think of any service you use and the value you get from it. What happens when Apple or Google start to try and capture the consumer surplus we receive?
  - simoncion 2y ago
    > [W]e hate being charged what something is worth to us. I'll rephrase this in a way that's more straightforward and clear: > We hate being charged every penny we could conceivably pay for a given thing. In part because many ordinary folks believe that a fair deal is for businesses to cover the cost of R&D for the thing and the cost of getting it to us, as well as a reasonable profit to cover both expected future support and future R&D for improvements and/or new products. And also in part because most folks can figure out what's likely to happen when every company out there demands that we pay them not just enough to cover the above, but every penny we could conceivably pay for the thing. (To spell it out: One suddenly has to make very hard choices about what one does without... likely for an uncomfortably long time. [0]) [0] If you think that this wouldn't happen, or that if it did it would be over in a matter of weeks (rather than years) remember the aphorism "The market can stay irrational longer than you can stay solvent.".
AlexandrB 2y ago
Is it really a marketplace if some central authority is controlling which customers get matched to which vendors? Sounds like central planning.
- arrosenberg 2y ago
  Its a marketplace with strict rate fixing. This is ironic since the libertarians who start these companies are hysterical reactionaries any time the government tries to do the same thing to make prices more fair for the public. Central planning would be if a committee decided how many rides there would be each year, regardless of demand.
demondemidi 2y ago
I used to fly into Pittsburg and take an Uber to my grandparents house 40 miles away. For years I could always get an Uber but then after the pandemic my trip was rejected so frequently that I had to start renting a car. So basically no one wanted the gig and Uber never told me my ride was unreasonable. Something changed in the algorithm to benefit drivers, Uber, or both, at the expense of the customer, and that info wasn’t made clear to the users.
- alwa 2y ago
  I’m curious: would you have felt better if Uber had just rejected your ride request upfront (“Sorry, we can’t offer rides that far” or something)? Or is this attitude of “hey, it’s a long shot, but let’s give it a try and see if anybody takes the job” closer to the attitude you’d like to see? If the latter, how would you communicate that to the users? I had an occasion a long time ago where I needed to request an Uber for a ride similar to what you’re describing. At that time, apparently the driver didn’t find out the route until they’d committed to the ride. The guy swiped to say he’d picked me up, and more or less broke down in tears when he found out where I was needing to go. He lived 40 miles in the other direction, was going off shift, and would be driving the whole 90 miles home without any prayer of a passenger to cover the time or cost. In that case I ended up giving the guy a generous amount of cash to cover the imposition, but I couldn’t bring myself to use Uber for that route in the future. Until recently, when I had to use Uber for that route again. This time it seemed like they’d gotten much better at accommodating drivers’ preference optionality: the guy who picked me up drove over 110mph all the way to the airport. Apparently when you drive like that, especially in an EV, the more miles the better… He explained that he could dial into the app that he preferred longer trips and trips between areas that happened to be connected by this lawless highway.
  - SoftTalker 2y ago
    Driving an EV at 110mph is going to sap the range horrendously. The power needed to overcome air resistance/drag is proportional to the cube of the speed.
    - 2y ago

biftek 2y ago

No, you ideally want all the jobs to be good. With the old model it was clear what the floor for getting something delivered was. Target could have instead adjusted order minimums or shrunk delivery zones instead. Gamifying peoples livelihood is the problem.

theptip 2y ago
> you ideally want all the jobs to be good That is… exactly the point I made, when I said: > you don’t want jobs that are strictly better Preference optionality is widely stated to be one of the features that gig workers like about the arrangement. The options you suggest are also valid ways of homogenizing the jobs to reduce variance. > Gamifying peoples livelihood is the problem To be clear Game Theory applies to all economic interactions. Mechanism Design is the branch of Game Theory pertaining to market design to achieve desired outcomes, such as “avoid adverse selection in my gig work marketplace”. Gamification is a specific application of video game design to economic interactions, it’s unrelated to what I’m discussing. (Examples of Gamification would be gaining experience points and levels for delivery, daily checking rewards, achievement badges, etc. - the general goal in Gamification is setting up a dopamine loop to encourage repeat use of the app. Hopefully it’s clear this is not what I was talking about.)
- mistrial9 2y ago
  applied Game Theory in real human history a.k.a. wealth-building, has shown that the biggest empires with the most wealth and the best armies are built with slavery. So slavery did win, again and again and again. I don't think most modern people have any idea how deep and wide the history of slavery is .. Game-theory is fun when you get good at it for designing markets and products, but let us not lose sight of the crucial discussion.. human beings with real lives are not equal to economic parts.
  - renewiltord 2y ago
    Obviously bullshit since the US has no slavery and became a world empire 100 years after abolishing slavery.
    - mistrial9 2y ago
      pre-Industrial revolution .. miraculously, formal slavery was disbanded widely only after industrial production and agricultural labor was industrialized.. no?
    - tacocataco 2y ago
      > The Thirteenth Amendment (Amendment XIII) to the United States Constitution abolished slavery and involuntary servitude, except as punishment for a crime. https://en.m.wikipedia.org/wiki/Thirteenth_Amendment_to_the_United_States_Constitution https://en.m.wikipedia.org/wiki/Thirteenth_Amendment_to_the_...

russdill 2y ago

We are entering an era where corporations have perfect data. They can charge each customer exactly the maximum amount possible, and pay each worker the exact minimum amount possible

brokenmachine 2y ago
This is very insightful. I knew there was something wrong with the whole thing but that explains it exactly.
robocat 2y ago
> They can charge each customer exactly the maximum amount possible The company captures the consumer surplus. Generally currently we often get way more value than we pay for. We hate having that surplus taken away from us and we hate being charged what something is worth to us. Two questions: How do we fight back? Is it unfair that we pay the amount that something is worth to us individually? Currently think of any service you use and the value you get from it. What happens when Apple or Google start to try and capture the consumer surplus we receive?
- simoncion 2y ago
  > [W]e hate being charged what something is worth to us. I'll rephrase this in a way that's more straightforward and clear: > We hate being charged every penny we could conceivably pay for a given thing. In part because many ordinary folks believe that a fair deal is for businesses to cover the cost of R&D for the thing and the cost of getting it to us, as well as a reasonable profit to cover both expected future support and future R&D for improvements and/or new products. And also in part because most folks can figure out what's likely to happen when every company out there demands that we pay them not just enough to cover the above, but every penny we could conceivably pay for the thing. (To spell it out: One suddenly has to make very hard choices about what one does without... likely for an uncomfortably long time. [0]) [0] If you think that this wouldn't happen, or that if it did it would be over in a matter of weeks (rather than years) remember the aphorism "The market can stay irrational longer than you can stay solvent.".

AlexandrB 2y ago

Is it really a marketplace if some central authority is controlling which customers get matched to which vendors? Sounds like central planning.

arrosenberg 2y ago
Its a marketplace with strict rate fixing. This is ironic since the libertarians who start these companies are hysterical reactionaries any time the government tries to do the same thing to make prices more fair for the public. Central planning would be if a committee decided how many rides there would be each year, regardless of demand.

demondemidi 2y ago

I used to fly into Pittsburg and take an Uber to my grandparents house 40 miles away. For years I could always get an Uber but then after the pandemic my trip was rejected so frequently that I had to start renting a car. So basically no one wanted the gig and Uber never told me my ride was unreasonable. Something changed in the algorithm to benefit drivers, Uber, or both, at the expense of the customer, and that info wasn’t made clear to the users.

alwa 2y ago
I’m curious: would you have felt better if Uber had just rejected your ride request upfront (“Sorry, we can’t offer rides that far” or something)? Or is this attitude of “hey, it’s a long shot, but let’s give it a try and see if anybody takes the job” closer to the attitude you’d like to see? If the latter, how would you communicate that to the users? I had an occasion a long time ago where I needed to request an Uber for a ride similar to what you’re describing. At that time, apparently the driver didn’t find out the route until they’d committed to the ride. The guy swiped to say he’d picked me up, and more or less broke down in tears when he found out where I was needing to go. He lived 40 miles in the other direction, was going off shift, and would be driving the whole 90 miles home without any prayer of a passenger to cover the time or cost. In that case I ended up giving the guy a generous amount of cash to cover the imposition, but I couldn’t bring myself to use Uber for that route in the future. Until recently, when I had to use Uber for that route again. This time it seemed like they’d gotten much better at accommodating drivers’ preference optionality: the guy who picked me up drove over 110mph all the way to the airport. Apparently when you drive like that, especially in an EV, the more miles the better… He explained that he could dial into the app that he preferred longer trips and trips between areas that happened to be connected by this lawless highway.
- SoftTalker 2y ago
  Driving an EV at 110mph is going to sap the range horrendously. The power needed to overcome air resistance/drag is proportional to the cube of the speed.
  - 2y ago