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Game Theory: Uber and Lyft

In recent times, Uber and Lyft have both been gaining immense popularity in most metropolitan cities around the world. For those who don’t know, Uber and Lyft are both similar private car companies that are substitutes for waiting for a cab. These have proved great success in that you can physically see your car coming towards you, seamlessly pay without the awkward exchange of cash all through your phone, the comfort of a clean car, and drivers know your name. All in all, both Uber and Lyft do tend to provide a better experience for the user as far as rides go. Uber/Lyft have both been faced with ceast and desist letters in multiple companies, with retrospect to the loss of business for actual taxicab drivers.

However, recently there has been increased dispute amongst the TWO companies. Ride poaching (stealing beyond 5000 rides), price cutting, etc. The latest of it has been recent reports stating that Uber drivers have called and canceled Lyfts in order to waste their time and in essence, steal their rides. Not only have the two been enforcing major price cuts throughout this past summer (I know from experience!) but reports state that Uber and Lyft have even been cutting their share from the drivers for each ride depending on time of day, week, etc. in order to retain and hire more drivers. Another tactic that Uber has stated doing is actually getting in rides of Lyft drivers, and providing them with a sign up kit as well as incentives to switch over/add Uber as one of their services.

The whole issue with Uber Vs. Lyft is a classic idea of prisoner’s dilemma in Game Theory in that they could potentially compete with each other and have to deal with the competition (what’s happening right now)… Or, they could not compete for each other’s employees and might not have as high of revenue but each have a steady share and friendly competition, or the two others would be that one company does continue with these acts and the other remains the same. A few new initiatives such as Curb, which helps hail cabs, have been on the market and also increasing popularity. CEO of Curb, Pat Lashinsky said, “Uber and Lyft are our frenemies. They’ve helped us focus on moving faster to innovate. The industry needs to get better. We will help taxis evolve from within instead of disrupting from the outside.” Personally, if Uber and Lyft worked together, instead of against each other, they could provide a more positive experience for both users but mainly for drivers and the company as a whole. However, judging by the way things are going right now, I’m not sure I can see a friendly competition in the near future, at least.


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