A recent New York Times article on how Uber is using various insights from behavioral economics to push, or nudge, its drivers to pick up more fares — sometimes with little benefit to them — has generated quite a bit of criticism of Uber. It’s just one of several stories of late that have cast the company in a poor light.
Uber Shows How Not to Apply Behavioral Economics
Nudges that benefit only one side are unethical.
April 13, 2017
Summary.
A New York Times article on how Uber is using insights from behavioral economics to push, or nudge, its drivers to pick up more fares — sometimes with little benefit to them — has generated quite a bit of criticism of Uber. It raises a question that executives often ask about how their own organizations might apply behavioral economics: “Isn’t there a danger it will be used with ill intent?” Behavioral economics takes the view that people have fallible judgment and malleable preferences and behaviors, can make mistakes calculating risks, can be impulsive or myopic, and are driven by social desires. Organizations that embrace behavioral economics design processes to use these tendencies to nudge people to do something. The determining factor between when nudges should be deemed good and when they should be deemed bad is: Are they being used to benefit both parties involved in the interaction or do they create benefits for one side and costs for the other?