Uber knows you're more likely to pay surge prices when your phone is dying

Dying phone batteries can lead to desperate measures when it comes to ordering an Uber.

The ride-hailing service has learned from its internal data that riders are much more likely to spring for surge-priced fares when their phone is nearing the end of its battery life. 

That observation, along with other quirks in rider behavior, were revealed by Uber's head of economic research, Keith Chen, on a recent episode of NPR's Hidden Brain podcast.

The reasoning here is pretty straightforward: Anyone with an amply charged phone can afford to wait and see if Uber's real-time demand-based pricing system might let up on the extra charge. But the prospect of being stranded with a dead phone makes time more of the essence.

Uber knows when your phone battery is running low because its app collects that information in order to switch into power-saving mode. But Chen swears Uber would never use that knowledge to gouge you out of more money.

"We absolutely don’t use that to kind of like push you a higher surge price, but it’s an interesting kind of psychological fact of human behavior," Chen said.

Uber's surge pricing uses a proprietary algorithm that accounts for how many users are hailing rides in an area at a given time. Customers are apparently less willing to believe that when the multiplier is a round number like 2.0 or 3.0, which seems more like it could have been arbitrarily made up by a human.

"They must have seen it was raining and just decided to mess with me, right?" Chen says of the customers' reactions. "Whereas if you say their trip is going to be 2.1 times more than it normally is, they say, 'Wow, there must be some smart algorithm in the background here.' It doesn't seem as unfair."

Even so, surge pricing is one of Uber's most widely hated features. Just look at social media the day after any big holiday and you'll see a flood of screenshots complaining of rates up to 9.9 times the company's normal price.

"This basic question of how psychologically painful the experience of paying a price is is something I worry about every day," Chen said.

Uber has also landed in hot water over its surge pricing in the past when fares have spiked during mass emergencies. The company had to apologize in 2014 after its pricing system tried to gouge those fleeing the Sydney hostage crisis.  

But it's also been a big driver of the $50 billion-valued startup's explosive growth.

"It's one of the reasons we've been able to displace taxis so quickly," Chen said. "The only way to get everyone who lives in a dense part of a city a car within five minutes was to do that through dynamic pricing."

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