Based on the article below, answer the following questions in full sentences

1. According to the article, are people more motivated by potential gains or potential losses? Please explain your reasoning. (1 paragraph; 2 points)

2. What is a "ludic loop" and how does Uber utilize it? (1 paragraph; 2 points)

3. Is having a dollar target a good or a bad thing for (a) Uber drivers and (b) Uber? Please explain your reasoning. (1 paragraph each; 4 points)

4. What is forward patching (1 sentence) and why is it so successful (1 paragraph; 2 points)?

How Uber Uses Psychological Tricks to Push Its Drivers' Buttons

The company has undertaken an extraordinary experiment in behavioral science to subtly entice an independent work force to maximize its growth.

(...)

Uber's innovations reflect the changing ways companies are managing workers amid the rise of the freelance-based "gig economy." Its drivers are officially independent business owners rather than traditional employees with set schedules. This allows Uber to minimize labor costs, but means it cannot compel drivers to show up at a specific place and time. And this lack of control can wreak havoc on a service whose goal is to seamlessly transport passengers whenever and wherever they want.

Uber helps solve this fundamental problem by using psychological inducements and other techniques unearthed by social science to influence when, where and how long drivers work. It's a quest for a perfectly efficient system: a balance between rider demand and driver supply at the lowest cost to passengers and the company.

Employing hundreds of social scientists and data scientists, Uber has experimented with video game techniques, graphics and noncash rewards of little value that can prod drivers into working longer and harder and sometimes at hours and locations that are less lucrative for them.

Faster pickup times mean more idle drivers.

To keep drivers on the road, the company has exploited some people's tendency to set earnings goals alerting them that they are ever so close to hitting a precious target when they try to log off. It has even concocted an algorithm similar to a Netflix feature that automatically loads the next program, which many experts believe encourages binge-watching. In Uber's case, this means sending drivers their next fare opportunity before their current ride is even over.

And most of this happens without giving off a whiff of coercion.

"We show drivers areas of high demand or incentivize them to drive more," said Michael Amodeo, an Uber spokesman. "But any driver can stop work literally at the tap of a button the decision whether or not to drive is 100 percent theirs."

(...)

While Uber is arguably the biggest and most sophisticated player in inducing workers to serve its corporate goals, other "gig economy" platforms are also involved. Uber's main competitor, Lyft, and popular delivery services like Postmates rely on similar approaches.

(...)

Of course, many companies try to nudge consumers into buying their products and services using psychological tricks. But extending these efforts to the work force is potentially transformative.

(...)

Uber exists in a kind of legal and ethical purgatory, however. Because its drivers are independent contractors, they lack most of the protections associated with employment. By mastering their workers' mental circuitry, Uber and the like may be taking the economy back toward a pre-New Deal era when businesses had enormous power over workers and few checks on their ability to exploit it.

"We're talking about this kind of manipulation that literally affects people's income," said Ryan Calo, a law professor at the University of Washington who with Alex Rosenblat has written a paper on the way companies use data and algorithms to exploit psychological weaknesses. Uber officials, he said, are "using what they know about drivers, their control over the interface and the terms of transaction to channel the behavior of the driver in the direction they want it to go."

(...)

Drivers, who typically keep what's left of their gross fare after Uber takes a roughly 25 percent commission, prefer some scarcity in their ranks to keep them busier and push up earnings. For its part, Uber is desperate to avoid shortages, seeking instead to serve every customer quickly, ideally in five minutes or less.

This is particularly true of shortages so pronounced as to create a "surge" that is, a higher fare than normal. While surges do mitigate shortages, they do so in part by repelling passengers, something directly at odds with Uber's long-term goal of dominating the industry. "For us, it's better not to surge," said Daniel Graf, Uber's vice president of product. "If we don't surge, we can produce more rides."

As a result, much of Uber's communication with drivers over the years has aimed at combating shortages by advising drivers to move to areas where they exist, or where they might arise. Uber encouraged its local managers to experiment with ways of achieving this.

"It was all day long, every day texts, emails, pop-ups: 'Hey, the morning rush has started. Get to this area, that's where demand is biggest,'" said Ed Frantzen, a veteran Uber driver in the Chicago area. "It was always, constantly, trying to get you into a certain direction."

Some local managers who were men went so far as to adopt a female persona for texting drivers, having found that the uptake was higher when they did.

"'Laura' would tell drivers: 'Hey, the concert's about to let out. You should head over there,'" said John P. Parker, a manager in Uber's Dallas office in 2014 and 2015, referring to one of the personas. "We have an overwhelmingly male driver population."

Uber acknowledged that it had experimented with female personas to increase engagement with drivers.

The friction over meeting demand was compounded by complaints about arrangements like aggressive car leases that required many drivers to work upward of 50 or 60 hours each week to eke out a profit. Uber officials began to worry that a driver backlash was putting them at a strategic disadvantage in their competition with Lyft, which had cultivated a reputation for being more driver-friendly.

(...)

Now Uber began a process of, in effect, becoming a little more like Lyft.

It rethought a lease program, softened the hectoring tone of its messages and limited their volume. At times it became positively cheery.

During roughly the same period, Uber was increasingly concerned that many new drivers were leaving the platform before completing the 25 rides that would earn them a signing bonus. To stem that tide, Uber officials in some cities began experimenting with simple encouragement: You're almost halfway there, congratulations!

While the experiment seemed warm and innocuous, it had in fact been exquisitely calibrated. The company's data scientists had previously discovered that once drivers reached the 25-ride threshold, their rate of attrition fell sharply.

And psychologists and video game designers have long known that encouragement toward a concrete goal can motivate people to complete a task.

"It's getting you to internalize the company's goals," said Chelsea Howe, a prominent video game designer who has spoken out against coercive psychological techniques deployed in games. "Internalized motivation is the most powerful kind."

(...)

In 2013, the company hired a consulting firm to figure out how to encourage more driving during the platform's busiest hours.

At the time, Lyft drivers could voluntarily sign up in advance for shifts. The consultants devised an experiment in which the company showed one group of inexperienced drivers how much more they would make by moving from a slow period like Tuesday morning to a busy time like Friday night about $15 more per hour.

For another group, Lyft reversed the calculation, displaying how much drivers were losing by sticking with Tuesdays.

The latter had a more significant effect on increasing the hours drivers scheduled during busy periods.

Kristen Berman, one of the consultants, explained at a presentation in 2014 that the experiment had roots in the field of behavioral economics, which studies the cognitive hang-ups that frequently skew decision-making. Its central finding derived from a concept known as loss aversion, which holds that people "dislike losing more than they like gaining," Ms. Berman said.

What motivates you more: seeing gains or fearing losses?

Still, Ms. Berman disclosed in an interview, Lyft eventually decided against using the loss-aversion approach, suggesting that the company has drawn brighter lines when it comes to potential manipulation.

As he tried to log off at 7:13 a.m. on New Year's Day last year, Josh Streeter, then an Uber driver in the Tampa, Fla., area, received a message on the company's driver app with the headline "Make it to $330." The text then explained: "You're $10 away from making $330 in net earnings. Are you sure you want to go offline?" Below were two prompts: "Go offline" and "Keep driving." The latter was already highlighted.

(...)

The messages were intended to exploit another relatively widespread behavioral tic people's preoccupation with goals to nudge them into driving longer.

Over the past 20 years, behavioral economists have found evidence for a phenomenon known as income targeting, in which workers who can decide how long to work each day, like cabdrivers, do so with a goal in mind say, $100 much the way marathon runners try to get their time below four hours or three hours.

(...)

Uber even published a study last year, using its vast pile of data on drivers' rides and hours, finding that a "substantial, although not most, fraction of partners" practice an extreme form of income targeting when they start on the platform, though they abandon it as they gain more experience. Strict income targeting is highly inefficient because it leads drivers to work long hours on days when business is slow and their hourly take is low, and to knock off early on days when business is brisk.

Ride-share companies can benefit if they get drivers to focus on dollar targets, instead of working only during the busiest times.

The beauty of the messages that Uber sent Mr. Streeter and his fellow drivers is that the drivers need not have even had a specific income goal in mind in order for the messages to work. Some of the most addictive games ever made, like the 1980s and '90s hit Tetris, rely on a feeling of progress toward a goal that is always just beyond the player's grasp. As the psychologist Adam Alter writes in his book "Irresistible," this mental state has a name: the "ludic loop." (The term was coined by the anthropologist and slot machine expert Natasha Schll.)

Uber, for its part, appears to be aware of the ludic loop. In its messages to drivers, it included a graphic of an engine gauge with a needle that came tantalizingly close to, but was still short of, a dollar sign.

And the ludic loop is far from the only video game feature that Uber has adapted as a way of keeping drivers on the road.

At any moment, the app shows drivers how many trips they have taken in the current week, how much money they have made, how much time they have spent logged on and what their overall rating from passengers is. All of these metrics can stimulate the competitive juices that drive compulsive game-playing.

(...)

Sometimes the so-called gamification is quite literal. Like players on video game platforms such as Xbox, PlayStation and Pogo, Uber drivers can earn badges for achievements like Above and Beyond (denoted on the app by a cartoon of a rocket blasting off), Excellent Service (marked by a picture of a sparkling diamond) and Entertaining Drive (a pair of Groucho Marx glasses with nose and eyebrows).

Of course, managers have been borrowing from the logic of games for generations, as when they set up contests and competition among workers. More overt forms of gamification have proliferated during the past decade. For example, Microsoft has used the approach to entice workers to perform the otherwise sleep-inducing task of software debugging.

But Uber can go much further. Because it mediates its drivers' entire work experience through an app, there are few limits to the elements it can gamify. Uber collects staggering amounts of data that allow it to discard game features that do not work and refine those that do. And because its workers are contractors, the gamification strategies are not hemmed in by employment law.

Kevin Werbach, a business professor who has written extensively on the subject, said that while gamification could be a force for good in the gig economy for example, by creating bonds among workers who do not share a physical space there was a danger of abuse. "If what you're doing is basically saying, 'We've found a cheap way to get you to do work without paying you for it, we'll pay you in badges that don't cost anything,' that's a manipulative way to go about it," he said.

For some drivers, that is precisely the effect. Scott Weber said he drove full time most weeks last year, picking up passengers in the Tampa area for both Uber and Lyft, yet made less than $20,000 before expenses like gas and maintenance. "I was a business that had a loss," said Mr. Weber, who is looking for another job. "I'm using payday loans."

Still, when asked about the badges he earns while driving for Uber, Mr. Weber practically gushed. "I've got currently 12 excellent-service and nine great-conversation badges," he said in an interview in early March. "It tells me where I'm at."

(...)

According to Mr. Parker, the former Uber manager in Dallas, increasing the number of drivers on the road by 20 percent at certain hours of the day, or in a busy part of town, can rein in a large fare surge.

More important, some of the psychological levers that Uber pulls to increase the supply of drivers have quite powerful effects.

Consider an algorithm called forward dispatch Lyft has a similar one that dispatches a new ride to a driver before the current one ends. Forward dispatch shortens waiting times for passengers, who may no longer have to wait for a driver 10 minutes away when a second driver is dropping off a passenger two minutes away.

Perhaps no less important, forward dispatch causes drivers to stay on the road substantially longer during busy periods a key goal for both companies.

Uber and Lyft explain this in essentially the same way. "Drivers keep telling us the worst thing is when they're idle for a long time," said Kevin Fan, the director of product at Lyft. "If it's slow, they're going to go sign off. We want to make sure they're constantly busy."

While this is unquestionably true, there is another way to think of the logic of forward dispatch: It overrides self-control.

(...)

As with viewers and binge-watching, many drivers appear to enjoy the forward-dispatch feature, which can increase earnings by keeping them busier. But it can also work against their interests by increasing the number of drivers on the road and defusing fare surges.

(...)

This pre-emptive hard-wiring can have a huge influence on behavior, said David Laibson, the chairman of the economics department at Harvard and a leading behavioral economist. Perhaps most notably, as Ms. Rosenblat and Luke Stark observed in an influential paper on these practices, Uber's app does not let drivers see where a passenger is going before accepting the ride, making it hard to judge how profitable a trip will be.

Sometimes all that is necessary is the mere setting of a so-called default. Because humans tend to be governed by inertia, automatically enrolling them in retirement savings plans and then allowing them to opt out results in far higher participation than letting them opt in.

"If done right, these things can be socially beneficial," Mr. Laibson said. "But you can think of all sorts of choice architecture that are quite contrary to human well-being."

Even Mr. Hall, the Uber research director who downplayed the importance of behavioral economics to the company, did make at least one concession. "The optimal default we set is that we want you to do as much work as there is to do," he said of the company's app. "You're not required to by any means. But that's the default."

Having more drivers on the road benefits ride-share companies, but drivers profit from surge pricing and scarcity in their ranks.

Ride-share companies, which do not bear the direct costs of drivers being idle, want to have as many drivers available as possible.

(...)

That moment of maturity does not appear to have arrived yet, however. Consider a prompt that Uber rolled out this year, inviting drivers to press a large box if they want the app to navigate them to an area where they have a "higher chance" of finding passengers. The accompanying graphic resembles the one that indicates that an area's fares are "surging," except in this case fares are not necessarily higher.

Some drivers believe that the intent is to trick them into driving where Uber wants them to go, rather than where driving would be most profitable, by implying that they will find a surge there. "They're trying to move people where they want them," said Mr. Weber, the Tampa-area driver. "But you get there and it's nothing. It happens all the time." Mr. Weber noted that the design of the graphic makes the prompt much easier to accept than decline, which requires pressing a small rectangle in the top left corner.

Uber said that the feature was an experiment intended primarily to help new drivers who frequently say they do not know where to find passengers, and that it could be changed if drivers were dissatisfied.