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

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

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.

Suggested Citation

  • Loukas Balafoutas & Adrian Beck & Rudolf Kerschbamer & Matthias Sutter, 2011. "What Drives Taxi Drivers? A Field Experiment on Fraud in a Market for Credence Goods," CESifo Working Paper Series 3461, CESifo.
  • Handle: RePEc:ces:ceswps:_3461
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    References listed on IDEAS

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    More about this item

    Keywords

    credence goods; expert services; natural field experiment; taxi rides; fraud; asymmetric information;
    All these keywords.

    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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