What Drives Taxi Drivers? A Field Experiment on Fraud in a Market for Credence Goods

Balafoutas, Loukas; Beck, Adrian; Kerschbamer, Rudolf; Sutter, Matthias

doi:10.2139/ssrn.1842097

Cited by 14 publications

(57 citation statements)

References 12 publications

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“…First, taxi trips are a setting where cheating may occur (see e.g. Balafoutas et al (2013)). Second, the rich data detailing precise trip times, pickup and dropoff locations, and other characteristics allow for identification of cheating over other alternative explanations for detours.…”

Section: Study Design and Datamentioning

confidence: 99%

“…This is compared to an average detour distance of 5.6% across all trips. Previous work including Balafoutas et al (2013) on taxi driver cheating have been unable to detect the heterogeneity in drivers' propensities to engage in such cheating due to the lack of driver level information. The large standard deviation of average detour distances across drivers suggests that the there is substantial heterogeneity across drivers that is not captured in the average amount of cheating observed.…”

Section: Individual Heterogeneity In Cheatingmentioning

confidence: 99%

“…The setting of this paper also fits in works on taxi drivers cheating that are well-documented in the literature. Balafoutas et al (2013) and Balafoutas et al (2017) there is substantial heterogeneity in cheating behaviors across individual drivers, and that cultural attitudes may provide a plausible mechanism for this heterogeneity, whereas the evidence is inconsistent with explanations of learning-by-doing.…”

Section: Introductionmentioning

confidence: 96%

“…Information asymmetries exist in many markets where sellers are able to identify the quality and quantity of service needed but the customers cannot. These markets are referred to as credence goods markets (Dulleck and Kerschbamer (2006)), and they are found in many economic settings: healthcare provisions (Gruber and Owings (1996), Gruber et al (1999)), Iizuka (2007)), auto repairs (Wolinsky (1993), Wolinsky (1995)), and taxi rides (Balafoutas et al (2013), Balafoutas et al (2017)) are three common examples of such settings. Taxi drivers, for example, may provide a longer trip than is optimal because they may be financially incentivized to do so, whereas their passengers may not know the local roads and traffic conditions to identify the optimal route.…”

Section: Introductionmentioning

confidence: 99%

“…Previous field studies have found that people tend to cheat in aggregate or lacked repeated observations of individuals to study heterogeneities in cheating across individuals (Fisman and Miguel (2007), Jacob and Levitt (2003), Martinelli et al (2018), Heron and Lie (2007, and Efendi et al (2007)). In credence goods markets, cheating has been documented in car mechanics (Wolinsky (1993), Wolinsky (1995), healthcare providers (Gruber and Owings (1996), Gruber et al (1999)), and taxi drivers (Balafoutas et al (2013), Balafoutas et al (2017)). Recent laboratory experiments including Dulleck et al (2011) and Kerschbamer et al (2017) have studied cheating in provision of goods in credence goods games.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Individual heterogeneity and cultural attitudes in credence goods provision

Tang

2020

European Economic Review

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I study the heterogeneity of credence goods provision in taxi drivers taking detours in New York City. First, I document that there is significant detouring on average by drivers. Second, there is significant heterogeneity in cheating across individuals, yet each individual's propensity to take detours is stable: drivers who detour almost always detour, while those who do not detour almost never do. Drivers who take longer detours on each trip also take such trips more often. Third, cultural attitudes plausibly explain some of this heterogeneity in behavior across individuals.

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Section: Study Design and Datamentioning

confidence: 99%

Section: Individual Heterogeneity In Cheatingmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 96%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Individual heterogeneity and cultural attitudes in credence goods provision

Tang

2020

European Economic Review

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Monitoring institutions in healthcare markets: Experimental evidence

2021

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This paper investigates the impact of monitoring institutions on market outcomes in health care. Healthcare markets are characterized by asymmetric information. Physicians have an information advantage over patients with respect to appropriate treatments, which they may exploit through over-or under-provision or by overcharging. We introduce two types of costly monitoring: endogenous and exogenous monitoring. When monitoring detects misbehavior, physicians have to pay a fine. Endogenous monitoring can be requested by patients, while exogenous monitoring is performed randomly by a third party. We present a toy model that enables us to derive hypotheses and test them in a laboratory experiment. Our results show that introducing endogenous monitoring reduces the level of undertreatment and overcharging. Even under high monitoring costs, the threat of patient monitoring is sufficient to discipline physicians. Exogenous monitoring also reduces undertreatment and overcharging when performed sufficiently frequently. Market efficiency increases when endogenous monitoring is introduced and when exogenous monitoring is implemented with sufficient frequency. Our results suggest that monitoring may be a feasible instrument to improve outcomes in healthcare markets. K E Y W O R D Scredence goods, laboratory experiment, monitoring, overtreatment, overcharging, physician behavior, undertreatment | INTRODUCTIONA key characteristic of healthcare markets is information asymmetry between patients and physicians. Patients consult physicians for treatment without knowing what type of treatment is needed to cure their illness. When diagnosing patients, physicians learn the true nature of the presenting disease and may exploit their informational advantage over patients through three forms of misbehavior: providing more treatment than necessary (overtreatment), charging for more treatment than provided (overcharging), and providing less treatment than necessary (undertreatment). Patients must trust that their physician is providing them with appropriate treatment, and as such, health services are often referred to as credence goods (Darby & Karni, 1973;Dulleck & Kerschbamer, 2006). Empirical evidence has documented physicians' reactions to financial incentives, suggesting that over-and undertreatment as well as overcharging are prevalent phenomena (

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Field experiments on dishonesty and stealing: what have we learned in the last 40 years?

et al. 2021

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Objectives Field experiments combine the benefits of the experimental method and the study of human behavior in real-life settings, providing high internal and external validity. This article aims to review the field experimental evidence on the causes of offending. Methods We carried out a systematic search for field experiments studying stealing or monetary dishonesty reported since 1979. ResultsThe search process resulted in 60 field experiments conducted within multiple fields of study, mainly in economics and management, which were grouped into four categories: Fraudulent/ dishonest behavior, Stealing, Keeping money, and Shoplifting. Conclusions The reviewed studies provide a wide variety of methods and techniques that allow the real-world study of influences on offending and dishonest behavior. We hope that this summary will inspire criminologists to design and carry out realistic field experiments to test theories of offending, so that criminology can become an experimental science.

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What Drives Taxi Drivers? A Field Experiment on Fraud in a Market for Credence Goods

Cited by 14 publications

References 12 publications

Individual heterogeneity and cultural attitudes in credence goods provision

Individual heterogeneity and cultural attitudes in credence goods provision

Monitoring institutions in healthcare markets: Experimental evidence

Field experiments on dishonesty and stealing: what have we learned in the last 40 years?

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