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Here’s how Uber uses psychology to convince you to pay higher prices

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It's Friday night. You've had one too many Jagerbombs and what remains of your sober consciousness is telling you to go home. 

There are two cabs waiting at a taxi rank - but given the time of night and the location, they're offering competitive 'surge' prices. One is two times her usual rate, the other is offering 2.1 times his usual rate. 

Which cab do you take?

"The first one, you condescending fool," is almost certainly your response. Yet this is exactly not what Uber has discovered. 

Head of Uber's economic research division Keith Chen revealed to NPR's Hidden Brain podcast that Uber has discovered a strong reaction to the "round number effect" on whether people are happy to accept paying more for a cab. When you look at all the data collected by Uber's vast network of users, it turns out we're more likely to accept a surge charge of 2.1 than 2.0.

"When you tell someone your trip is going to be two times what it would normally be, people think that is capricious and unfair – somebody just made that up," said Chen. "Whereas if you say your trip is going to be 2.1 times what it normally is they think there is some smart algorithm at work, it doesn’t seem quite so unfair."

Yep. Uber will offer you a price of 2.1 rather than 2.0 because some of the absolute worst kind of idiots out there have proven we're all more likely to accept 2.1 "because of the algorithms man".

Now if you'll excuse us, we'll be smashing our heads into our desks until the pain stops.

[Via: NPR]

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