Brown bag: Do you mind me paying less? Measuring Other-Regarding Preferences and Reputation Effects in the Market for Taxis

Economics

Speaker:	Graeme Pearce, University of Exeter
Date:	Tuesday 6 October 2015
Time:	12.30 - 13.30
Location:	Amory A115

Further details

We present a natural field experiment designed to measure other-regarding preferences and reputation effects in the market for taxis. We employed trained testers, of varying ethnicity, to take a number of predetermined taxi journeys. In each case we endowed them with only 80% of the expected fare. Testers revealed this to the driver mid-journey and asked for a portion of the journey for free. In a 2x2 between-subject design we vary the length of the journey and whether drivers have reputational concerns or not. We find that the majority of drivers give part of the journey for free and over 25% complete the journey in full. Giving is found to be proportional to the length of the journey. Further, we find no evidence of in-group favouritism, but strong out-group negativity against black testers by both white and South-Asian drivers. Reputation concerns cannot explain the drivers' behaviour on average, but are significant when drivers face white testers. The data lend support to the quantitative predictions of experiments that measure other-regarding preferences, and shed further light on how discrimination can manifest itself within our preferences.