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

42 Pages Posted: 27 May 2011

See all articles by Loukas Balafoutas

Loukas Balafoutas

University of Innsbruck

Adrian Beck

University of Innsbruck

Rudolf Kerschbamer

University of Innsbruck; Centre for Economic Policy Research (CEPR)

Matthias Sutter

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; University of Cologne - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 28, 2011

Abstract

Credence goods are characterized by informational asymmetries between sellers and consumers that invite fraudulent behavior by sellers. This paper presents the results of a natural field experiment on taxi rides in Athens, Greece, set up to measure different types of fraud and to examine the influence of passengers’ presumed information and income on the extent of fraud. Results reveal that taxi drivers cheat passengers in systematic ways: Passengers with inferior information about optimal routes are taken on longer detours while asymmetric information on the local tariff system leads to manipulated bills. Higher income seems to lead to more fraud.

Keywords: credence goods, expert services, natural field experiment, taxi rides, fraud, asymmetric information

JEL Classification: C930, D820

Suggested Citation

Balafoutas, Loukas and Beck, Adrian and Kerschbamer, Rudolf and Sutter, Matthias, What Drives Taxi Drivers? A Field Experiment on Fraud in a Market for Credence Goods (April 28, 2011). CESifo Working Paper Series No. 3461. Available at SSRN: https://ssrn.com/abstract=1851334

Loukas Balafoutas

University of Innsbruck ( email )

Universitätsstraße 15
Innsbruck, Innsbruck 6020
Austria

Adrian Beck

University of Innsbruck ( email )

Universitätsstraße 15
Innsbruck, Innsbruck 6020
Austria

Rudolf Kerschbamer

University of Innsbruck ( email )

Universitaetsstrasse 15
Innsbruck, A - 6020
Austria
+43 512 507 7400 (Phone)
+43 512 507 2980 (Fax)

HOME PAGE: http://www.uibk.ac.at/c/c4/c409/staff/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Matthias Sutter (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

University of Cologne - Department of Economics

Cologne, 50923
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
82
Abstract Views
1,152
rank
203,997
PlumX Metrics