Do Digital Platforms Reduce Moral Hazard? The Case of Uber and Taxis

Meng Liu, Erik Brynjolfsson and Jason Dowlatabadi

No 25015, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Digital platforms like Uber can enhance market transparency and mitigate moral hazard via ratings of buyers and sellers, real-time monitoring, and low-cost complaint channels. We compare driver choices at Uber with taxis by matching trips so they are subject to the same optimal route. We also study drivers who switch from taxis to Uber. We find: (1) drivers in taxis detour about 7% on airport routes, with non-local passengers experiencing longer detours; (2) these detours lead to longer travel times; and (3) drivers on the Uber platform are more likely to detour on airport routes with high surge pricing.

JEL-codes: D47 D8 D86 L15 L91 M52 (search for similar items in EconPapers)
Date: 2018-09
New Economics Papers: this item is included in nep-ind, nep-pay and nep-tre
Note: PR
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Citations: View citations in EconPapers (12)

Published as Meng Liu & Erik Brynjolfsson & Jason Dowlatabadi, 2021. "Do Digital Platforms Reduce Moral Hazard? The Case of Uber and Taxis," Management Science, vol 67(8), pages 4665-4685.

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Journal Article: Do Digital Platforms Reduce Moral Hazard? The Case of Uber and Taxis (2021)
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