12 ms·

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

87 points by nwotnagrom 6y ago

TechBro8615 6y ago
But there are no moral hazards with paying hospitals $35k for a covid death.
- crooked-v 6y ago
  Even sticking strictly to the realm of economic incentives, $35K is chump change compared to the billing potential when keeping an unhealthy patient alive as long as possible.
  - ulucs 6y ago
    It still makes for a great incentive to label any deaths they couldn't prevent a Covid death.
- jsilence 6y ago
  how did whataboutism suddenly creep into this thread?
nayuki 6y ago
Sadly paywalled for $30.
- dredmorbius 6y ago
  Not yet on LibGen though I suspect it will be shortly. http://libgen.rs/scimag/?q=10.1287%2Fmnsc.2020.3721 http://libgen.rs/scimag/?q=10.1287%2Fmnsc.2020.3721
- enjoyyourlife 6y ago
  https://www.nber.org/system/files/working_papers/w25015/w25015.pdf https://www.nber.org/system/files/working_papers/w25015/w250...
ahyattdev 6y ago
I have had this taken to me. Taxi drivers "accidently" take the wrong turn into a tunnel that adds at least an extra mile to the trip. You are billed directly on distance traveled so it is not surprising.
fma 6y ago
One of my first trips in Vegas...I took a taxi from the airport to MGM, I believe. It's pretty near by. I get in the taxi, and the driver asks if I want to take the highway because it's faster. Of course...I said sure...everyone wants faster right? I found out later in Las Vegas, the taxi drivers are required to take the shortest route unless the passenger requests for another route. Well played, sir.
- gogopuppygogo 6y ago
  Stories like this are exactly why the taxi cartels were decimated by ride sharing companies.
  - dencodev 6y ago
    I took a taxi once in my life. He deliberately missed an exit to add 10 minutes to trip. I told him I was going to the hospital to meet my partner who had just been taken there by ambulance. I'm glad taxis are dying.
  - farnsworth 6y ago
    I love when the driver pretends that the credit card machine is broken then glares at me when I try to explain that I'm not carrying $65 in cash, then suddenly the credit card machine starts working again, and just paying for the damn thing is a 10 minute ordeal that nearly has me fearing for my life.
    - dawnerd 6y ago
      Yep been there too in SF. I told the driver I would be more than happy to have the police come and suddenly the machine worked. Those drivers get 0 tip.
    - speedgoose 6y ago
      In Paris they will drive you to an ATM.
      - 6y ago
deathanatos 6y ago
Huh. I've literally never had a taxi driver take a long route on me. The route I normally take (home to airport & back) is pretty simple though. I did have one taxi driver (thanks Denver, CO!) alter the terms of the deal on me at payment time. When I questioned why the fare was higher than expected (since it was supposed to be a flat rate from the airport) he asked me how he was supposed to make money if he charged the agreed-upon rate. One of the most idiotic things I've ever heard someone in a business transaction say, and I almost told him to take a hike right there. But, my company was paying, so I figured it wasn't worth the trouble… I don't think I've really ever had any issues with Uber/Lyft, aside from I wish I could rate drivers honestly without worrying about ending their career. They're honestly not that different from taxis…
- sa46 6y ago
  > They're honestly not that different from taxis… Strong disagree. Uber is better in pretty much every way over taxis. It's hard to overstate how much better Uber is compared to taxis. It's (generally) cheaper, cleaner, more predictable, and more pleasant. - Outside of major cities, you can order a pickup but there's no guarantee that anyone will show up. I've had taxis cancel after waiting for 40 minutes. - Cleanliness in taxis ranges from meh to horrifying. - Manipulative techniques like pretending that the credit-card machine stopped working to force a cash transaction. - In Vegas taxis, there's an obnoxious screen 3 inches in front of your face. > I don't think I've really ever had any issues with Uber/Lyft, aside from I wish I could rate drivers honestly without worrying about ending their career. The big difference between uber and taxis is that uber drivers have a direct incentive to improve via ratings. The incentive for taxi drivers to improve is much more indirect.
  - TheMechanist 6y ago
    In regular taxis, you will get more money if you drive the longer route i.e. there is a very strong incentive to be increasingly dishonest.
  - cforrester 6y ago
    > The big difference between uber and taxis is that uber drivers have a direct incentive to improve via ratings. I'm not sure this is true. There's a limit to how well any driver can perform their job; unless a driver is rude to me or drives unsafely, I rate them five stars every time because I can't think of any legitimate reasons to rate them lower. When minor annoyances do occur, my desire not to disrupt another person's livelihood pressures me to let it go and rate 5 stars anyway. If they went above and beyond, I'd still rate them 5 stars. For me, that means the rating system tends to homogenize all service quality ranging from average to amazing. My impression is that the incentive is more fear-based: even a brief period of below-average performance might cost you your job.
deleted 6y ago
[deleted]
dejawu 6y ago
Last month I had a family member go to the hospital (things are okay now). We called an ambulance and then followed it to as it took a route to the hospital that was twenty minutes longer than necessary. When we arrived, we asked if they were using navigation and they confirmed that they were not. In our case things were fine but I couldn't help but think that that's definitely cost lives before.
juusto 6y ago
The majority of my unpleasant experiences abroad were taxi related, regardless of the country. -In SF got shouted at because I calculated wrong the tip -Seoul a driver told me I owed him 10x what was agreed with other drivers joining in (scary) -In Lisbon the famous "this restaurant is closed today I will take you to another one" (from what I understood they get commission) got me twice -Barcelona the driver "hid" a high bill and told me I gave him 5€ bill instead (I showed him the receipt from the ATM where I just took the money before paying him since his machine "did not work") Since ride sharing apps became a thing? Way fewer problems and a way for me to influence positively/negatively a ride.
- foolfoolz 6y ago
  one of my favorite stories is when i landed in saigon i took a taxi to my hotel. literally my first experience in the city. and the taxi driver didn’t give me the right change, he kept a bunch of money. so i’m yelling at him. he’s acting like he doesn’t speak english. it goes on so long the people im with check in to the hotel. i move up front to the drivers side door, with it open, standing between the door and the driver telling him he’s a fucking thief and the hotel people are trying to calm me down and tell me to call the taxi company. eventually he relents and gave me my money. it wasn’t about the money (VND to USD is cheap) i just did not want to let this guy fuck me as soon as i landed
  - haimez 6y ago
    Hey, I don’t blame you for being angry- but, and this is only an empathy exercise: where do you think that taxi driver is today? Right at this moment, even?
    - remote_phone 6y ago
      Why is this relevant? Rules and laws are there for a reason. If society lets taxi drivers steal from people because they are taxi drivers, where do you draw the line for expected fair treatment of everyone? Do only rich people have the expectation of behaving correctly?
turbinerneiter 6y ago
Sooo: * Taxi drivers are not really known to be earning well * Taxi drivers cheat to increase their earnings * Uber is cheaper than taxis How does that work?
- chmod775 6y ago
  Control, surveillance, and accountability.
- MattGaiser 6y ago
  1. Uber doesn't require a medallion. Imagine if you needed to pay an extra mortgage to drive a taxi. 2. Accountability. Uber tracks things properly.
  - sircastor 6y ago
    3. Uber subsidizes their fares with. VC capital. And unsustainably so.
    - onion2k 6y ago
      They only do that in markets where they're not established. It's just an extremely high marketing budget that gets spent on discount codes. As soon as Uber has a foothold the codes disappear and people have to pay for their rides. Ita no different to the $10 PayPal gave people for signing up or the $7 of BTC Coinbase give to referrals really.
      - sofixa 6y ago
        The fact that Uber are still bleeding money after being established in most markets they still operate in ( others were sold), would indicate otherwise.
        deleted 6y ago
        [deleted]
        6y ago
KKKKkkkk1 6y ago
Do the authors disclose any conflicts of interest?
emteycz 6y ago
Taxis in Prague were absolutely unusable. Regular stealing, overcharging, drivers not arriving on time (or ever), cars smelling like (sometimes literally) shit, drivers taking you all around the city, drivers taking you into their gang's base, etc. Uber solved all of that - I love that company.
- inglor_cz 6y ago
  Yeah, another Prague resident here. Regular taxi service in Prague reeked of the mob. Absolutely unpleasant, dishonest, menacing people. Uber contractors are much more wholesome people, I had zero bad experiences and my wife trusts them enough to sit into their car alone. That would not be the case with old Prague taxi service.
mensetmanusman 6y ago
China is convinced that 100% surveillance will reduce moral hazards. Unfortunately, this is likely true on average, but the western value system says it is too high a price to pay for freedom. I wonder how this will play out over the next century.
- alfredlind 6y ago
  > China is convinced that 100% surveillance will reduce moral hazards. Are you saying unlike USA? > the western value system says it is too high a price to pay for freedom Except we do have 100% surveillance in the US and equivalent programs in all the 5 eye countries. I assume you're aware of PRISM? https://en.wikipedia.org/wiki/PRISM_(surveillance_program) https://en.wikipedia.org/wiki/PRISM_(surveillance_program) Seems we're quick to point out "moral hazards" in other cultures and just as quick to forget the obvious ones in our own.
alkonaut 6y ago
Any taxi including Uber should be driving with the Nav visible and if the time/distance differs significantly from the nav (e.g Waze) your own phone then you direct them using your nav. If your taxi doesn’t use a visible nav then I’d understand prefering an Uber. But this hasn’t happened to me for many years. How do taxi drivers get away with taking detours when every passenger has had their own navigation system in their pockets - which includes live traffic info - in their pocket!? And what makes Uber drivers less likely to pull the same stunt? Your taxi should be gps tracked, app-booked and fares prepaid or at least pre-agreed/estimated in the taxi company’s app. I don’t want to negotiate prices with taxi drivers I want it clear in the taxi company’s app what I’m paying.
analog31 6y ago
I suspect that the morality of digital vs analog platforms depends on the platform and situation. Amazon comes to mind. Uber drivers might be more honest for now because they haven't figured out how to fiddle the system, what they can get away with, or would get lost if they strayed from the directions given by Google Maps. But I've read about plenty of fiddles involving the decision of whether or not to pick up a customer, based on neighborhood, destination, whatever. So they might just be using a different fiddle -- one that is easier to hide.

87 points by nwotnagrom 6y ago

TechBro8615 6y ago

But there are no moral hazards with paying hospitals $35k for a covid death.

crooked-v 6y ago
Even sticking strictly to the realm of economic incentives, $35K is chump change compared to the billing potential when keeping an unhealthy patient alive as long as possible.
- ulucs 6y ago
  It still makes for a great incentive to label any deaths they couldn't prevent a Covid death.
jsilence 6y ago
how did whataboutism suddenly creep into this thread?

nayuki 6y ago

Sadly paywalled for $30.

dredmorbius 6y ago
Not yet on LibGen though I suspect it will be shortly. http://libgen.rs/scimag/?q=10.1287%2Fmnsc.2020.3721 http://libgen.rs/scimag/?q=10.1287%2Fmnsc.2020.3721
enjoyyourlife 6y ago
https://www.nber.org/system/files/working_papers/w25015/w25015.pdf https://www.nber.org/system/files/working_papers/w25015/w250...

ahyattdev 6y ago

I have had this taken to me. Taxi drivers "accidently" take the wrong turn into a tunnel that adds at least an extra mile to the trip. You are billed directly on distance traveled so it is not surprising.

fma 6y ago

One of my first trips in Vegas...I took a taxi from the airport to MGM, I believe. It's pretty near by. I get in the taxi, and the driver asks if I want to take the highway because it's faster. Of course...I said sure...everyone wants faster right? I found out later in Las Vegas, the taxi drivers are required to take the shortest route unless the passenger requests for another route. Well played, sir.

gogopuppygogo 6y ago
Stories like this are exactly why the taxi cartels were decimated by ride sharing companies.
- dencodev 6y ago
  I took a taxi once in my life. He deliberately missed an exit to add 10 minutes to trip. I told him I was going to the hospital to meet my partner who had just been taken there by ambulance. I'm glad taxis are dying.
- farnsworth 6y ago
  I love when the driver pretends that the credit card machine is broken then glares at me when I try to explain that I'm not carrying $65 in cash, then suddenly the credit card machine starts working again, and just paying for the damn thing is a 10 minute ordeal that nearly has me fearing for my life.
  - dawnerd 6y ago
    Yep been there too in SF. I told the driver I would be more than happy to have the police come and suddenly the machine worked. Those drivers get 0 tip.
  - speedgoose 6y ago
    In Paris they will drive you to an ATM.
    - 6y ago

deathanatos 6y ago

Huh. I've literally never had a taxi driver take a long route on me. The route I normally take (home to airport & back) is pretty simple though. I did have one taxi driver (thanks Denver, CO!) alter the terms of the deal on me at payment time. When I questioned why the fare was higher than expected (since it was supposed to be a flat rate from the airport) he asked me how he was supposed to make money if he charged the agreed-upon rate. One of the most idiotic things I've ever heard someone in a business transaction say, and I almost told him to take a hike right there. But, my company was paying, so I figured it wasn't worth the trouble… I don't think I've really ever had any issues with Uber/Lyft, aside from I wish I could rate drivers honestly without worrying about ending their career. They're honestly not that different from taxis…

sa46 6y ago
> They're honestly not that different from taxis… Strong disagree. Uber is better in pretty much every way over taxis. It's hard to overstate how much better Uber is compared to taxis. It's (generally) cheaper, cleaner, more predictable, and more pleasant. - Outside of major cities, you can order a pickup but there's no guarantee that anyone will show up. I've had taxis cancel after waiting for 40 minutes. - Cleanliness in taxis ranges from meh to horrifying. - Manipulative techniques like pretending that the credit-card machine stopped working to force a cash transaction. - In Vegas taxis, there's an obnoxious screen 3 inches in front of your face. > I don't think I've really ever had any issues with Uber/Lyft, aside from I wish I could rate drivers honestly without worrying about ending their career. The big difference between uber and taxis is that uber drivers have a direct incentive to improve via ratings. The incentive for taxi drivers to improve is much more indirect.
- TheMechanist 6y ago
  In regular taxis, you will get more money if you drive the longer route i.e. there is a very strong incentive to be increasingly dishonest.
- cforrester 6y ago
  > The big difference between uber and taxis is that uber drivers have a direct incentive to improve via ratings. I'm not sure this is true. There's a limit to how well any driver can perform their job; unless a driver is rude to me or drives unsafely, I rate them five stars every time because I can't think of any legitimate reasons to rate them lower. When minor annoyances do occur, my desire not to disrupt another person's livelihood pressures me to let it go and rate 5 stars anyway. If they went above and beyond, I'd still rate them 5 stars. For me, that means the rating system tends to homogenize all service quality ranging from average to amazing. My impression is that the incentive is more fear-based: even a brief period of below-average performance might cost you your job.

deleted 6y ago

[deleted]

dejawu 6y ago

Last month I had a family member go to the hospital (things are okay now). We called an ambulance and then followed it to as it took a route to the hospital that was twenty minutes longer than necessary. When we arrived, we asked if they were using navigation and they confirmed that they were not. In our case things were fine but I couldn't help but think that that's definitely cost lives before.

juusto 6y ago

The majority of my unpleasant experiences abroad were taxi related, regardless of the country. -In SF got shouted at because I calculated wrong the tip -Seoul a driver told me I owed him 10x what was agreed with other drivers joining in (scary) -In Lisbon the famous "this restaurant is closed today I will take you to another one" (from what I understood they get commission) got me twice -Barcelona the driver "hid" a high bill and told me I gave him 5€ bill instead (I showed him the receipt from the ATM where I just took the money before paying him since his machine "did not work") Since ride sharing apps became a thing? Way fewer problems and a way for me to influence positively/negatively a ride.

foolfoolz 6y ago
one of my favorite stories is when i landed in saigon i took a taxi to my hotel. literally my first experience in the city. and the taxi driver didn’t give me the right change, he kept a bunch of money. so i’m yelling at him. he’s acting like he doesn’t speak english. it goes on so long the people im with check in to the hotel. i move up front to the drivers side door, with it open, standing between the door and the driver telling him he’s a fucking thief and the hotel people are trying to calm me down and tell me to call the taxi company. eventually he relents and gave me my money. it wasn’t about the money (VND to USD is cheap) i just did not want to let this guy fuck me as soon as i landed
- haimez 6y ago
  Hey, I don’t blame you for being angry- but, and this is only an empathy exercise: where do you think that taxi driver is today? Right at this moment, even?
  - remote_phone 6y ago
    Why is this relevant? Rules and laws are there for a reason. If society lets taxi drivers steal from people because they are taxi drivers, where do you draw the line for expected fair treatment of everyone? Do only rich people have the expectation of behaving correctly?

turbinerneiter 6y ago

Sooo: * Taxi drivers are not really known to be earning well * Taxi drivers cheat to increase their earnings * Uber is cheaper than taxis How does that work?

chmod775 6y ago
Control, surveillance, and accountability.
MattGaiser 6y ago
1. Uber doesn't require a medallion. Imagine if you needed to pay an extra mortgage to drive a taxi. 2. Accountability. Uber tracks things properly.
- sircastor 6y ago
  3. Uber subsidizes their fares with. VC capital. And unsustainably so.
  - onion2k 6y ago
    They only do that in markets where they're not established. It's just an extremely high marketing budget that gets spent on discount codes. As soon as Uber has a foothold the codes disappear and people have to pay for their rides. Ita no different to the $10 PayPal gave people for signing up or the $7 of BTC Coinbase give to referrals really.
    - sofixa 6y ago
      The fact that Uber are still bleeding money after being established in most markets they still operate in ( others were sold), would indicate otherwise.
      - deleted 6y ago
        [deleted]
      - 6y ago

KKKKkkkk1 6y ago

Do the authors disclose any conflicts of interest?

emteycz 6y ago

Taxis in Prague were absolutely unusable. Regular stealing, overcharging, drivers not arriving on time (or ever), cars smelling like (sometimes literally) shit, drivers taking you all around the city, drivers taking you into their gang's base, etc. Uber solved all of that - I love that company.

inglor_cz 6y ago
Yeah, another Prague resident here. Regular taxi service in Prague reeked of the mob. Absolutely unpleasant, dishonest, menacing people. Uber contractors are much more wholesome people, I had zero bad experiences and my wife trusts them enough to sit into their car alone. That would not be the case with old Prague taxi service.

mensetmanusman 6y ago

China is convinced that 100% surveillance will reduce moral hazards. Unfortunately, this is likely true on average, but the western value system says it is too high a price to pay for freedom. I wonder how this will play out over the next century.

alfredlind 6y ago
> China is convinced that 100% surveillance will reduce moral hazards. Are you saying unlike USA? > the western value system says it is too high a price to pay for freedom Except we do have 100% surveillance in the US and equivalent programs in all the 5 eye countries. I assume you're aware of PRISM? https://en.wikipedia.org/wiki/PRISM_(surveillance_program) https://en.wikipedia.org/wiki/PRISM_(surveillance_program) Seems we're quick to point out "moral hazards" in other cultures and just as quick to forget the obvious ones in our own.

alkonaut 6y ago

Any taxi including Uber should be driving with the Nav visible and if the time/distance differs significantly from the nav (e.g Waze) your own phone then you direct them using your nav. If your taxi doesn’t use a visible nav then I’d understand prefering an Uber. But this hasn’t happened to me for many years. How do taxi drivers get away with taking detours when every passenger has had their own navigation system in their pockets - which includes live traffic info - in their pocket!? And what makes Uber drivers less likely to pull the same stunt? Your taxi should be gps tracked, app-booked and fares prepaid or at least pre-agreed/estimated in the taxi company’s app. I don’t want to negotiate prices with taxi drivers I want it clear in the taxi company’s app what I’m paying.

analog31 6y ago

I suspect that the morality of digital vs analog platforms depends on the platform and situation. Amazon comes to mind. Uber drivers might be more honest for now because they haven't figured out how to fiddle the system, what they can get away with, or would get lost if they strayed from the directions given by Google Maps. But I've read about plenty of fiddles involving the decision of whether or not to pick up a customer, based on neighborhood, destination, whatever. So they might just be using a different fiddle -- one that is easier to hide.