The Johns Hopkins Carey Business School, under the Johns Hopkins University, the similar school that oversaw findings during the COVID-19 pandemic, is recently echoing their Christmastime research, saying that Lyft and Uber passengers, or those who patronize ridesharing apps, overpay when they don’t price check. How true?
The proponent of the research, Michael Luca, who is the director of the Technology and Society Initiative in the business school, found that “riders are routinely leaving money on the table by failing to compare prices across Uber and Lyft. In other words, it’s not literally playing with money, but the failure to check the prices of those apps result to overpaying.
“Think about the last time you took an Uber or a Lyft. Did you check both apps, or just book on the first one you opened?” the Johns Hopkins University correspondent pointed out.
Surprised? Here’s the methodology.
The study’s proponents audited over 2,000 identical rides with exactly similar routes and similar times in New York City, primarily, then compared the prices with Lyft and Uber. For those similar rides, the prices differ by approximately 14 percent on average. Neither app is consistently less affordable.
Data showed that among passengers who launch Lyft or Uber, only about 16 percent open both of those apps, despite how simple and easy it is to check second quotes. Though the ridesharing apps won’t like, these mistakes increase the apps’ revenues by more than $300 million yearly in the Big Apple alone, money that could be saved by the passengers.
“Small frictions can create real barriers in digital markets,” stated Luca. “When riders don’t compare prices, they end up paying more on average, and platforms face less pressure to compete on price.”
For Luca, ridesharing should always be the consumer’s space, and the world must aspire to have “a digital economy that empowers” these consumers, adding that “the most effective policy is that which needs to account for the way people engage with digital markets, and how this affects competition and the consumer’s well-being."
Luca has the position of being the director of the Technology and Society Initiative at the Johns Hopkins Carey Business School. The working paper was released via the National Bureau of Economic Research, in collaboration with Jeffrey Fossett of Harvard Business School and Yejia Xu of Theia Insights.
Established as early as 1876, Johns Hopkins University is among the most prestigious private research universities globally. Located in Baltimore in Maryland, it was founded as America’s first research university, modeled after European institutions.
Known for its world-leading programs in medicine, public health, and research, it highlights interdependent teaching and research across a wide array of academic divisions, from health professions to arts and engineering, with a mission to improve lives through discovery.
Some of the most popular fields of study in the school are Genetics, Biochemistry, Cell Biology, Artificial Intelligence, Visual Arts, Business, and so much more.
"When riders don’t compare prices, they end up paying more on average, and platforms face less pressure to compete on price,” continued Luca.