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

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  • Loukas Balafoutas
  • Adrian Beck
  • Rudolf Kerschbamer
  • Matthias Sutter

Abstract

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. Copyright 2013, Oxford University Press.

Suggested Citation

  • Loukas Balafoutas & Adrian Beck & Rudolf Kerschbamer & Matthias Sutter, 2013. "What Drives Taxi Drivers? A Field Experiment on Fraud in a Market for Credence Goods," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(3), pages 876-891.
    • Handle: RePEc:oup:restud:v:80:y:2013:i:3:p:876-891
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    File URL: http://hdl.handle.net/10.1093/restud/rds049
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    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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