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

Credence goods are characterized by informational asymmetries between sellers and consumers that invite fraudulent behaviour by sellers. This article presents a natural field experiment on taxi rides in Athens, Greece, set up to measure different types of fraud and to examine the influence of passen...

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Bibliographic Details
Published in:	The Review of economic studies Vol. 80; no. 3; p. 76
Main Authors:	Balafoutas, Loukas, Beck, Adrian, Kerschbamer, Rudolf, Sutter, Matthias
Format:	Journal Article
Language:	English
Published:	Oxford Oxford University Press 01-07-2013
Subjects:	Automobile drivers Fraud Information Manipulation Passengers Studies Taxicabs Greece Athens Greece
Online Access:	Get full text
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Summary:	Credence goods are characterized by informational asymmetries between sellers and consumers that invite fraudulent behaviour by sellers. This article presents 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. We find that passengers with inferior information about optimal routes are taken on significantly longer detours, while lack of information on the local tariff system increases the likelihood of manipulated bills by about fifteen percentage points. Passengers' perceived income seems to have no effect on fraud. [PUBLICATION ABSTRACT]
ISSN:	0034-6527 1467-937X