Service Quality in the Gig Economy: Empirical Evidence about Driving Quality at Uber

52 Pages Posted: 28 Dec 2019

See all articles by Susan Athey

Susan Athey

Stanford University

Juan Camilo Castillo

Stanford University - Department of Economics

Bharat Chandar

Stanford Graduate School of Business

Date Written: December 5, 2019

Abstract

The rise of marketplaces for goods and services has led to changes in the mechanisms used to ensure high quality. We analyze this phenomenon in the Uber market, where the system of pre-screening that prevailed in the taxi industry has been diminished in favor of (automated) quality measurement, reviews, and incentives. This shift allows greater flexibility in the workforce but its net effect on quality is unclear. Using telematics data as an objective quality outcome, we show that UberX drivers provide better quality than UberTaxi drivers, controlling for all observables of the ride. We then explore whether this difference is driven by incentives, nudges, and information. We show that riders' preferences shape driving behavior. We also find that drivers respond to both user preferences and nudges, such as notifications when ratings fall below a threshold. Finally, we show that informing drivers about their past behavior increases quality, especially for low-performing drivers.

Keywords: Online Platforms, Review Systems, Nudges, Ride-Hailing

JEL Classification: L15, L11

Suggested Citation

Athey, Susan and Castillo, Juan Camilo and Chandar, Bharat, Service Quality in the Gig Economy: Empirical Evidence about Driving Quality at Uber (December 5, 2019). Available at SSRN: https://ssrn.com/abstract=3499781 or http://dx.doi.org/10.2139/ssrn.3499781

Susan Athey

Stanford University ( email )

Stanford, CA 94305
United States

Juan Camilo Castillo (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Jane Stanford Way
Stanford, CA 94305-6072
United States

Bharat Chandar

Stanford Graduate School of Business ( email )

Stanford, CA
United States

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