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

The majority of my unpleasant experiences abroad were taxi related, regardless of the country.<p>-In SF got shouted at because I calculated wrong the tip<p>-Seoul a driver told me I owed him 10x what was agreed with other drivers joining in (scary)<p>-In Lisbon the famous &quot;this restaurant is closed today I will take you to another one&quot; (from what I understood they get commission) got me twice<p>-Barcelona the driver &quot;hid&quot; 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 &quot;did not work&quot;)<p>Since ride sharing apps became a thing? Way fewer problems and a way for me to influence positively&#x2F;negatively a ride.

One of my first trips in Vegas...I took a taxi from the airport to MGM, I believe. It&#x27;s pretty near by. I get in the taxi, and the driver asks if I want to take the highway because it&#x27;s faster. Of course...I said sure...everyone wants faster right?<p>I found out later in Las Vegas, the taxi drivers are required to take the shortest route unless the passenger requests for another route.<p>Well played, sir.

I have had this taken to me. Taxi drivers &quot;accidently&quot; 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.

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.<p>In our case things were fine but I couldn&#x27;t help but think that that&#x27;s definitely cost lives before.

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&#x27;s base, etc. Uber solved all of that - I love that company.

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

Huh. I&#x27;ve literally never had a taxi driver take a long route on me. The route I normally take (home to airport &amp; back) is pretty simple though.<p>I <i>did</i> 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&#x27;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&#x27;t worth the trouble…<p>I don&#x27;t think I&#x27;ve really ever had any issues with Uber&#x2F;Lyft, aside from I wish I could rate drivers honestly without worrying about ending their career. They&#x27;re honestly not that different from taxis…

Any taxi including Uber should be driving with the Nav visible and if the time&#x2F;distance differs significantly from the nav (e.g Waze) your own phone then you direct them using your nav.<p>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!?<p>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&#x2F;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.

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

I suspect that the morality of digital vs analog platforms depends on the platform and situation. Amazon comes to mind.<p>Uber drivers might be more honest for now because they haven&#x27;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.<p>But I&#x27;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.

Sadly paywalled for $30.

Do the authors disclose any conflicts of interest?