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

Author

Listed:
  • Balafoutas, Loukas

    () (University of Innsbruck)

  • Beck, Adrian

    () (University of Innsbruck)

  • Kerschbamer, Rudolf

    () (University of Innsbruck)

  • Sutter, Matthias

    () (Max Planck Institute for Research on Collective Goods)

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

  • Balafoutas, Loukas & Beck, Adrian & Kerschbamer, Rudolf & Sutter, Matthias, 2011. "What Drives Taxi Drivers? A Field Experiment on Fraud in a Market for Credence Goods," IZA Discussion Papers 5700, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp5700
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    References listed on IDEAS

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    6. Dulleck, Uwe & Kerschbamer, Rudolf & Sutter, Matthias, 2009. "The Economics of Credence Goods: On the Role of Liability, Verifiability, Reputation and Competition," IZA Discussion Papers 4030, Institute of Labor Economics (IZA).
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    asymmetric information; fraud; credence goods; taxi rides; natural field experiment; expert services;
    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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