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Econometrica Vol. 93 No. 3 2025

Personalized Pricing and the Value of Time: Evidence From Auctioned Cab Rides

Nicholas Buchholz1; Laura Doval2; Jakub Kastl1,3,4; Filip Matějka5,6; Tobias Salz7,3

1 Department of Economics Princeton University · 2 Economics Division, Graduate School of Business, Columbia University · 3 NBER · 4 CEPR , · 5 Charles University · 6 The Economics Institute of the Academy of Sciences of the Czech Republic · 7 Department of Economics, MIT

open access

Abstract

We recover valuations of time using detailed data from a large ride‐hail platform, where drivers bid on trips and consumers choose between a set of rides with different prices and wait times. Leveraging a consumer panel, we estimate demand as a function of both prices and wait times and use the resulting estimates to recover heterogeneity in the value of time across consumers. We study the welfare implications of personalized pricing and its effect on the platform, drivers, and consumers. Taking into account drivers' optimal reaction to the platform's pricing policy, personalized pricing lowers consumer surplus by 2.5% and increases overall surplus by 5.2%. Like the platform, drivers benefit from personalized pricing. By conditioning prices on drivers' wait times and not on consumers' data, the platform can capture a significant portion of the profits garnered from personalized pricing, and simultaneously benefit consumers.

DOI
10.3982/ecta18838
Volume
93
Issue
3
Pages
929-958
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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