Still, it is difficult to measure precisely how much people value their time. Now, a paper co-authored by an MIT economist uses ride-sharing data to reveal multiple implications of personalized pricing. By focusing on a European ride-sharing platform that auctions its rides, the researchers found that people are more responsive to prices than to wait times. They also found that people pay more to save time during the workday, and that when people pay more to avoid waiting, it notably increases business revenues. And some segments of consumers are distinctly more willing than others to pay higher prices. Specifically, when people can bid for rides that arrive sooner, the amount above the minimum price the platform can charge increases by 5.2 percent. Meanwhile, the gap between offered prices and the maximum that consumers are willing to pay decreases by 2.5 percent. In economics terms, this creates additional 'surplus' value for firms, while lowering the 'consumer surplus' in these...
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