MIT Sloan Management Review Article on Who Should Price a Gig?

Arriving at Boston’s Logan International Airport after a tiring journey, Mia opened the Uber app to find a ride home. Her relief at seeing the message “Your Uber driver is arriving in 3 minutes” was short-lived because the driver canceled. In the next 30 minutes, half a dozen Uber drivers accepted her ride request, then canceled, before one eventually arrived. What was happening?

Uber, like many platform companies, needs to efficiently match service providers (drivers) and customers (riders). To do so, it must ensure that pricing is competitive enough for riders to choose the service and for drivers to have the incentive to deliver it. Mia struggled to get a ride because Uber had started providing more earnings transparency for drivers by allowing them to see their expected compensation and route destinations before picking up riders. A change intended to benefit drivers had a significant downside for riders: More drivers began canceling rides they deemed unprofitable.

About the Author

Jovana Karanovic is an assistant professor at the Rotterdam School of Management at Erasmus University and the founder of the Reshaping Work foundation. Elizabeth J. Altman is an associate professor of management at the Manning School of Business at the University of Massachusetts Lowell; guest editor for MIT Sloan Management Review’s Future of the Workforce initiative; and coauthor of Workforce Ecosystems: Reaching Strategic Goals With People, Partners, and Technologies (MIT Press, 2023). Carmelo Cennamo is a professor of strategy and entrepreneurship at Copenhagen Business School, director of the Digital Markets Competition Forum, and affiliate professor and director of the Platform Economy & Regulation Monitor at SDA Bocconi School of Management.

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