Surge Pricing and Customer Complaints

Abstract

Many two-sided matching platforms, such as those for lodging, labor, and ridesharing, use a review system to monitor service providers, where dissatisfied customers can complain about their service experience. Using comprehensive datasets from a large ridesharing platform, this paper explores whether service providers (drivers) systematically receive complaints for reasons that are not their fault. We find that surge pricing, a factor that is not the driver's fault, increases the likelihood of complaints by a factor of 1.12 to 1.33, on average. This effect is amplified for novice drivers and during rush hours. We use two additional approaches to provide causal support for the finding: a regression discontinuity exploiting a policy change that sets caps on surge pricing, and a matching estimator exploiting discontinuity in surge triggering. To extend the endpoint of our analysis to the economic impact, we estimate how the complaints affect a driver's daily income. We calculate that 25% of a driver's immediate income gain from surge fares is offset by the future income loss due to the increased complaint rate. These results suggest platforms should account for non-service-provider-responsible factors when monitoring and evaluating customer reviews to improve service experiences.