Shared Gold Medals, and DoorDash drivers - How the Game Theory concept called the Traveler's Dilemma is all around us
Episode 12 of Game Theory gets into the rising prices of apps like Uber and DoorDash
The last time you were drunk at 4 p.m. after a brunch went late on a Sunday, and you needed to get home, it's likely that your Uber was way, way more expensive than this exact ride at this exact time, ever was before.
While your first thought was probably Am I making a bad habit out of Sunday Fun Day? I imagine your second thought was, what the hell is going on here?
The obvious first answer is quite obvious: COVID.
People lose their jobs and qualify for Unemployment
Unemployment pays more than many annoying jobs like fast food and retail.
It's irresponsible to accept a job THAT PAYS YOU LESS than your unemployment
If Wal-Mart can't get employees, how do we expect Uber to get them?
But, even with that, it feels weird to you. It feels like something is going on. Well, that's because something IS going on.
According to Bloomberg and VICE, gig economy workers have started gaming the algorithm by declining deliveries until it's re-offered to them with a bigger fee. The movement is called #DeclineNow.
The hashtag part is incredibly annoying, I agree.
The movement started, ironically, in the abandoned-but-now-repurposed main mill of Bethlehem Steel. The irony comes in the fact Bethlehem Steel was everything that was right with American industry for decades before slowly developing cancer of management and union leadership. The company collapsed in shame and its headquarters were razed recently, I think 2016-ish.
Inside that very place where labor and management idiocy ruined a local economy, DoorDash drivers figured out that they can game the gig-economy apps by declining opportunities until they get a fair price.
This is an example of something called the Traveler's Dilemma which is part of the broader economic idea of Game Theory. The general thesis of the dilemma is that if two people are owed the same amount for a good/service, the person in charge can low-ball them by asking them what it's worth. The kicker is that the person who offers the lowest price gets a small reward.
You can read more about the Traveler's Dilemma HERE -- it's my favorite explainer on the topic.
In the traveler's dilemma, it behooves the two parties to continually low-ball themselves until they each accept $2 for something that used to cost say, $100. And so it is with the gig economy.
Drivers are declining so that instead of accepting whatever comes their way, they flip the supply/demand relationship so that the offer is higher. The kicker on their side is that there isn't a person behind the offer -- there's AI or an algorithm. When this happens, the algorithm is at risk of simply upping the baseline offer, which hurts the company and probably the consumer.
HOWEVER.
The game here only works if every driver in an area who is available for a delivery agrees to decline until it reaches a certain point. This feels a lot like a wildcat strike, doesn't it? Workers banning together to withhold their services until pay is figured out.
The problem is that many drivers are simply looking for extra cash. So, if a college kid is willing to take $5 for a quick order, that tells the algorithm that $5 is acceptable for that kind of delivery (remember the variables: time of day, restaurant, location of drop, etc.).
Personally, I'm not sure what to make of any of this. If you're a worker, and you want $7 instead of $5, more power to ya. But, as a consumer, I've started walking to get my own takeout more after reading about this.
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