what drives taxi drivers? definition an expert seller knows more about the quality a consumer needs...
TRANSCRIPT
What Drives Taxi Drivers?
• Definition▫an expert seller knows more about the
quality a consumer needs than the consumer herself
• Examples▫repair services (cars, computers)▫medical treatments
• Problem:▫the expert can cheat
overtreatment - providing a unnecessarily high quality
undertreatment - providing a too low qualityovercharging - charging unjustifiably much
1
Expert Services – Credence Goods
What Drives Taxi Drivers?
• Theory▫Darby and Karni (1973)▫Dulleck and Kerschbamer (2006)
• Experiments in the lab▫Dulleck, Kerschbamer, and Sutter (2010)
• Field data▫Hughes and Yule (1992), Gruber and Owings
(1996), Gruber et al. (1999), Izuka (2007): medicine
▫Schneider (2009): car repairs• Problems with data collection, control• Our solution: Natural field experiment in
the taxi market
2
Expert Services – Literature
What Drives Taxi Drivers?
• Literature on labor supply of taxi drivers (Camerer et al., 1997; Farber, 2005; Farber, 2008, Crawford and Meng, 2011), and on stopping behavior of taxi drivers (Gambetta and Hamill, 2005)
• however, little is known about the actual product taxi drivers sell – an expert service!
• Possible types of fraud▫ overtreatment = taking longer route▫ overcharging = charging more than justified by
chosen route (e.g. night tariff, fictional fares etc.)▫ undertreatment ruled out
3
Taxi services
What Drives Taxi Drivers?
• H1: Information about city▫passengers who are not familiar with the city
are more likely to face overtreatment
• H2: Information about fares▫passengers who are not familiar with the fares
are more likely to face overcharging
• H3: Income▫high-income passengers receive worse service
than low-income passengers
Research Question – Hypotheses
4
What Drives Taxi Drivers?
• Treatment design: 3x2
• 174 taxi rides in Athens, Greece
5
Treatments
local native non-local native foreigner
low income 29 29 29
high income 29 29 29
What Drives Taxi Drivers?
• The experiment
▫three experimenters (all male in their mid-late twenties)
▫manipulation of origin▫simultaneous observations: same starting
point, same destination, different roles▫create reference point with local native▫randomization over routes, days, and time
6
Method
What Drives Taxi Drivers?
• High income▫wearing suit▫top-end hotel
• Low income▫shabby clothes▫low-end accommodation
7
Method – Signaling Income
What Drives Taxi Drivers?
• keeping track of fraud
▫GPS-logger
records exact position every single second allows reconstructing exact route, duration etc.
8
Method – GPS Logger
What Drives Taxi Drivers?
• Facts▫15 routes▫63 h net driving time▫2,236 km net travelled distance (≈ Innsbruck to
Damascus)
▫13 km mean trip distance▫22 min mean trip lenght▫3% female drivers▫42% Skoda, 30% Toyota
9
Method
What Drives Taxi Drivers? 10
Method – Routes
What Drives Taxi Drivers? 11
Example for Overtreatment
What Drives Taxi Drivers? 12
Example for Overtreatment
OT-index: 1.43additional distance: 4.2km
What Drives Taxi Drivers? 13
Example for Overcharging
price-index: 1.61additional fare: €9.5
local non-local foreigner
What Drives Taxi Drivers? 14
Results – Origin of Customer
locals non-locals foreigners
price-index 1.04 1.09 1.19
+4.4% +9.3% / +14.2%
What Drives Taxi Drivers?
locals non-locals foreigners
OT-index 1.03 1.08 1.08
+5.4% +-0 / +5.4%
15
Results – Origin of Customer
What Drives Taxi Drivers? 16
Results – Origin of Customer
locals non-locals foreigners
OC frequency 0.02 0.03 0.17
+50% +567% / +850%
What Drives Taxi Drivers? 17
Results – Income of Customer
price-index locals non-locals foreigners total
low income 1.01 1.07 1.19 1.09
high income 1.07 1.11 1.18 1.12
What Drives Taxi Drivers? 18
Results – Income of Customer
OT-index locals non-locals foreigners total
low income 1.01 1.06 1.06 1.05
high income
1.05 1.10 1.11 1.09
What Drives Taxi Drivers? 19
Results – Income of Customer
OC frequency
locals non-locals foreigners total
low income 0.00 0.00 0.21 0.07
high income 0.03 0.07 0.14 0.08
What Drives Taxi Drivers?
(1)PriceIndex
(2)Overtreatment
Index
(3)OverchargingDummy
nonlocal0.101**(0.051)
0.093***(0.035)
0.018(0.027)
foreign0.147***(0.054)
0.005(0.024)
0.094 ***(0.045)
rich0.046(0.045)
0.060**(0.026)
0.018(0.045)
timezone-0.000(0.003)
-0.004**(0.002)
0.006 **(0.003)
Additional controls Yes Yes Yes
Results – Econometric Analysis
20
What Drives Taxi Drivers?
•Overtreatment: more extensive for passengers who are not from the city (H1)
•Overcharging: more common for foreigners (H2)
•Income: Partial effects only (overtreatment)
•(Some) taxi drivers know whom to cheat and how to cheat!
21
Conclusion
What Drives Taxi Drivers?
Thank you!
22