Do You Mind Me Paying Less? Measuring Other-Regarding Preferences in the Market for Taxis

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  • Brit Grosskopf
    University of Exeter
  • Graeme Pearce
    University of Exeter
We present a natural field experiment designed to measure other-regarding preferences in the market for taxis. We employed 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 the amount they could afford to pay to the driver midjourney and asked for a portion of the journey for free. In a 2 × 2 between-subjects design, we vary the length of the journey and whether a business card is elicited. We find that (1) the majority of drivers give at least part of the journey for free, (2) giving is proportional to the length of the journey, and (3) 27% of drivers complete the journey. Evidence of outgroup negativity against black testers is also reported. In order to link our empirical analysis to behavioral theory, we estimate the parameters of a number of utility functions. The data and the structural analysis lend support to the quantitative predictions of experiments that measure other-regarding preferences, and they shed further light on how discrimination can manifest itself within our preferences.

Keywords

  • other-regarding preferences, field experiment, discrimination
Original languageEnglish
Pages (from-to)5059-5074
JournalManagement Science
Volume66
Issue number11
Early online date21 May 2020
DOIs
Publication statusPublished - Nov 2020
Externally publishedYes

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