I'm glad people are looking into this, but this "study" is actually pretty poor. Mostly it's just recounting grumpy opinions of drivers.
Fundamentally, the potential issues relating to information asymmetries come from the fact that such asymmetries might result in a market failing to clear. Absolutely nowhere does it attempt to discuss this issue. It spends a fair bit of time discussing Uber's attempts to transmit information to drivers, thereby reducing said asymmetries (e.g., "demand is high in your area").
Absolutely nowhere does it attempt to quantify the harms caused by information asymmetries.
Nowhere does it discuss the fact that Uber's primary role is that of a Walrasian auctioneer (https://en.wikipedia.org/wiki/Walrasian_auction) in a market with sparse goods and where actually processing the relevant information is probably too complex for any agent to do. There is actually a fair bit of theoretical economic literature on this - the net result is generally that the best strategy for an auctioneer who taxes transaction value is to approach market clearing (i.e. what would happen with perfectly rational agents and perfect information).
Overall, this article is just a thin academic veneer on top of what is basically just typical journalistic griping about Uber. What's the point?
So glad this is being addressed, I'd been hoping for real research on these issues for a while. To wildly extrapolate with no evidence, which is what I do best:
Is anyone else worried that data analysis/"AI" is going to replace data itself as a source of power? The idea that information asymmetries fuel businesses has been around for a long time--a main way for a company to make a long-term profit trading goods is possessing information over the customers. As information becomes more available to the consumer, it looks like the ability to process that data becomes the asymmetry used for profit; Uber's surge-pricing is effective not just because they know more about how busy a city is than an individual consumer, but because they can analyze that data more effectively. I foresee (again, totally speculating and probably wrong) consumers having access to more and more data, but being outcompeted cognitively by large corporations, who are better able to understand and exploit their behavior.
I've not much read in the field of communication and had some negative preconceptions. But this was a very interesting read! But how should one progress ones thinking from science like this?
All it tells me is that working for Uber isn't all fun and games. Heck, content like that is found on every corporate intranet.
As an economist I think: "Well but people are using it to make above minimum wage money, so it seems to be working". (Explanation re replies: not to be dismal, but the working of the market via Uber is not really in dispute macro-wise AFAIK. So how should you weigh #N complaints by drivers in a qualitative piece of research?)
From a legal perspective: "It's pretty clear this is illegal in the Netherlands, since it definitely is a employment relationship."
Entrepreneurial thinking: "With a little more clarity in the platform and a little more honesty / openness towards drivers, Uber could be drivers walhalla but at a cost to the consumer".
> As an economist I think: "Well but people are using it to make above minimum wage money, so it seems to be working".
Not just the dismal science, but the incurious science!
There's a lot that economists could work with here, if they were so inclined. Standard market doctrine requires perfect information. What's the impact of infomation asymmetry? What does 'perfect' information really mean in this context, or any context? It it really a market between riders and drivers, or a two-sided market?
The entire article is about market power and price setting. How about looking at that in other industries?
Standard market doctrine requires perfect information. What's the impact of infomation asymmetry?
No, it doesn't.
This is like saying "physics doesn't work in 3D" or "physics doesn't work on non-spherical objects" because Physics 101 textbooks typically use 1-dimensional problems involving spheres to illustrate the concepts. Perfect information is just an assumption made to derive mathematically the simplest possible textbook model that illustrates the concept.
Oh sorry, you misunderstood! I was thinking along the lines how This particular type of research (qualitative, based on written work by drivers, low #N, interpretative but nevertheless a sorted argument) could help my thinking. Not how 'my' type of research could answer all sorts of interesting questions! Give me the data and I would deliver you a scheme that should benefit both Uber and the drivers ;)
For economists the idea of platform economics (two sided markets) is well-established. The micro-economics pretty generally goes in the direction of game theory, since there are many interactions between consumers, platforms (Uber, publishers, Google analytics) and producers (drivers, writers, marketeers). Often great network effect for the platform and thus the direction towards natural monopolies. After reading a few paragraphs I thought 'oh they are re-establishing a known field in another science', but I got hooked by the details.
Fundamentally, the potential issues relating to information asymmetries come from the fact that such asymmetries might result in a market failing to clear. Absolutely nowhere does it attempt to discuss this issue. It spends a fair bit of time discussing Uber's attempts to transmit information to drivers, thereby reducing said asymmetries (e.g., "demand is high in your area").
Absolutely nowhere does it attempt to quantify the harms caused by information asymmetries.
Nowhere does it discuss the fact that Uber's primary role is that of a Walrasian auctioneer (https://en.wikipedia.org/wiki/Walrasian_auction) in a market with sparse goods and where actually processing the relevant information is probably too complex for any agent to do. There is actually a fair bit of theoretical economic literature on this - the net result is generally that the best strategy for an auctioneer who taxes transaction value is to approach market clearing (i.e. what would happen with perfectly rational agents and perfect information).
Overall, this article is just a thin academic veneer on top of what is basically just typical journalistic griping about Uber. What's the point?