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Do Digital Platforms Reduce Moral Hazard? The Case of Uber and Taxis (informs.org)
87 points by nwotnagrom on March 7, 2021 | hide | past | favorite | 95 comments


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.


I remember back when I visited the US, and I took a taxi back to the airport. I asked how much it was upfront because I wanted to use up the last of my dollars.

I even remember telling him that this was the amount of cash I had up front, which was a little more than the quote and he was okay with it. That's how much i'd give him for the ride.

Only to get to the airport and have him getting cross because the amount I was going to give him wasn't going to cover some tip after I told him exactly how much I would be able to give him. A tip for a taxi? The American begging industry has to die.


Almost exact same happened to me: on my way home I agreed on a price, then as we arrived at the airport the taxi driver got mad (and asked if I was Russian :-).

I hadn't been so spesific though to point out that this was all dollars I had left.


It might be something that could be excused if it was applied slightly more evenly, like never knowing how much something's costs when you buy it because "taxes", even though that is the most dick move.

I can't imagine having a builder perform some tasks on my house, only for them to tell me afterwards that the price we agreed wasn't going to cover it because actually it's not enough to feed their family.


> The American begging industry has to die.

the sharing economy slave labor where people need 3 jobs just to pay the rent is part of that problem. minimum salaries (or the lack of) is what separates barbarian societies from civilized ones.


Somebody better let Denmark, Finland, Italy, Norway, Sweden and Switzerland know they are barbarian societies for want of a minimum wage!


Most of those, such as Denmark, Norway and Sweden, have very strong unions which essentially guarantee a minimum wage for everyone without legislation.

Denmark has a $16 per hour average minimum wage and Finland and Sweden has a collective bargaining rule, even if you are not a union member and it is illegal to do anything anti-union.

The person you responded to talked about minimum salaries which those places absolutely do have, even if they don't have a minimum wage.


The Scandinavian countries have de facto minimum wages because the unions have actual power there.


Yes because improving quality of life is as simple as legislating it. You really think those drivers wouldn't be out of a job for charging 3x?


No, not really. I would still have gone with the taxi if it was 15% more. I just would have known about it and come prepared, rather than being deceived.


This is what I hate about taxis: they expect you to haggle. I come from a culture where you pay the price on the label without any bullshit.


Haggling is fun! You should learn to enjoy it. What’s not acceptable is changing the terms after an agreement has been reached. A deals a deal, even with a dirty dealer.

In all those stories the drivers are preying on the weaknesses of the passengers. It’s like a bully berating someone at lunch in kindergarten. The answer is the same, you yell right back at them. Assuming you’re not stupid enough to pay up front you still hold the cards as you can refuse all payment as well.


Haggling is inefficient, tiresome and frankly demeaning for both parties.


You could say the same about picking up a stranger at a bar for sex but it’s still fun.


Uber really shines in countries with a culture of haggling and gouging tourists.

Landing in Cairo, step one was to buy a local sim and check the price for a ride into town. When the local taxi tout quoted me triple that price, I showed him the app and said I’d pay that. He pulled out a laminated card with his tourist rate printed on it explaining that this was the “official price” and that here was no way anybody could get a cheaper one.

50 feet further toward the exit, he tried pulling out a different laminated card, explaining that it contained the “old price”, which was now only double ubers price. So I hit the “go” button on the Uber.

He never went lower double Ubers price, and followed me all the way to my driver before giving up.

It’s the ultimate travel “screw remover”.


Even in countries without haggling cultures - in Ireland where taxis are strictly regulated and always have a meter, I several times have found myself forced to listen to the views of the driver, usually extremely racist/sexist/bigotted views, and as a frequent cyclist I've been nearly hit by taxis on many occasions, including one where I can only conclude the driver was intentionally trying to knock me off the bike. I pulled up next to him at the next light and told him through the open window that he nearly hit me, and he jumped out of the taxi and started pushing me and shouting at me (this happened in Dublin, of course). Crazy experience, now that I look back on it.

This kind of thing doesn't tend to happen with uber drivers, but it does seem that taxi driving attracts a certain type all over the world. Of course, I've had plenty of taxi rides with lovely friendly drivers too.


I wonder what kind of regional variations there are on that; where I'm from, the anecdotal impression I've gotten is that sexual harassment is more common from Uber drivers than from drivers for local taxi companies. My guess is that, at least where I'm from, Uber employment is more volatile than local taxis; an Uber driver is more easily fired, but the barrier for entry is lower, so significant damage can be done before a harassing driver is let go.


South France: taxis have a manipulated meter installed which they can alter the price via a button next to their leg or the gear stick. The route starts with normal meter speed and in the last 1 or 2 miles the prize often doubles or triples!! They will _always_ do this when picking up tourists from the airport. Or if they realize you don't know the system.

Being a taxi driver in Nice is like being part of an organized crime ring (petty crime for sure but still crime). It's "organized" because they even has/had lobbyists engaging in local politics.

Not sure if Uber actually fixed this problem in the region but I recall when the first Uber's started driving they would sometimes end up in physical fights with the taxi drivers who unlike Uber drivers were in radio contact with each other and happy to help fight an unruly customer (or competitor).

They're so convinced that they're entitled to this scam that reasoning with them is impossible. I ended up with an argument at 2 AM because the taxi driver refused to acknowledge that he was actually manipulating the meter. That was even after I showed him the wiring and the button with which he did it. I made the same trip many times so I knew the fare was ~€65 but certainly not €250 (!!).

From all the sh1tholes I've visited and been ripped off by taxi drivers in 5 decades on this planet nothing has ever come close to how blatant they go about it in the South of France. :chefs_kiss:


Yeah, ride sharing apps can be more safe if the alternatives in the market are not regulated properly. That is the case where I live (India) for rickshaws and to some extent, cab services.


> I several times have found myself forced to listen to the views of the driver, usually extremely racist/sexist/bigotted views

"if you say you're English these days, you'll be arrested and thrown in jail" ?


> if you say you're English these days, you'll be arrested and thrown in jail

What do you mean by this?


it's from a Stewart Lee bit that makes a similar point OP was making.

https://www.youtube.com/watch?v=iZG-Ig3M7r4 (it's restricted outside of UK unfortunately)

an earlier variation of the same that talks about homosexuality / morality: https://www.youtube.com/watch?v=4n-UGQcG3Jw

Both "Stewart Lee's Comedy vehicle" and his more recent "Content Provider" are excellent.


> taxi driving attracts a certain type

Or the stress of driving a taxi drives people insane.


Or those who drive a taxi have initially few percent of insane, and those who can’t stand it just leave. My experience (15 years everyday local taxi user) is that good people didn’t last long until uberlikes rushed into town and made it a “still hard but now regular” job with rules and feedback, for both drivers and clients. Before that, taxi was a grey market filled with pathetic excuse of a thug trying to expel the weak, do some easy money and tell their story. Not a single regret about these times and these imbeciles.


Reminds me of Costa Rica taking advantage of their tourists with high prices.

For example their main airport (SJO) blocks Uber access on their WiFi network by dropping packets and serving bad DNS records.

Normal tourists don't realize this is done in purpose, and they'll stand puzzled checking their phone screens unable to open Uber.

The official airport taxi price is three times more expensive than a normal taxi or Uber.


[flagged]


Individual people are still awesome for the most part. We're on the subject of Egypt, which is a perfect example of this. Walk around Cairo and you'll meet amazing generous people who will go out of their way to help you with no expectation of reward. Just folks proud of their country. Let your guard down a little at the right time and you'll find yourself invited into people's homes and having amazing experiences.

But you also get to see the bad part of human nature. This last trip, I had walked my family well off the beaten track on a market street, past all the tourist junk and deep into the hammer and fish head district. There was a busy little tea house on a side alley, so we headed over to sit down.

Before we could cover the 50 feet down the alley, a guy hopped up from one of the tables, ran over and directed us the last 10 feet to the table. Thus appointing himself our middleman for the transaction (as I'm sure anybody who's been to Africa or the Mideast has experienced). After our 2 teas and the kids' 2 Karkade, he presented us with the bill: 80 Egyptian Pounds. The price you'd expect to pay at the Hilton in downtown Cairo.

As it happened, our table was right in front of the sign with the cafe menu printed in Arabic. I pointed at the top line: "This says "tea." And this is the number "two" next to it.", and offered a £10 note.

Oh no, there has been a mistake. This is the old sign. A quick back and forth between middleman and Actual Waiter, then the bill is settled and the middleman disappears into the back, never to be seen again.

I don't really mind the dishonesty and Tourist Prices in Tourist District. But it's grating when you can't escape it.

Still, the good people and experiences always find a way of balancing out the bad. It's well worth going.


> But it's grating when you can't escape it.

Utterly exhausting.

Subscriptions, MITM, fees, advertising, loyalty programs, ...

All these unnecessary transaction costs absolutely deter me.

Mitch Hedberg captured it nicely: I give you cash, you give me donut. And done. No paper receipt needed.


The OP said these apps are a practical way to not get screwed as an individual traveler.

I didn't read any negative generalization about the citizens of these countries.

Also there are many posts here about taxi drivers of developed countries (the "oppressors" if you want to be reductionist).


While there’s some truth to what you’re saying, the taxi drivers at the train stations/airports are the worst parasites. They’ll stay there all day waiting for somebody naïve enough to pay triple the regular price.


Pre Uber the taxi drivers in Amsterdam were similarly as awful and I don’t remember the Dutch being exploited any time recently.


On the other hand, I’ve been in several ubers in nyc where the driver clearly had no idea how to get anywhere. When confronted with some closed streets for a planned parade, he got stuck in traffic and had no idea how to get out. I hopped out of the Uber, hailed a yellow cab, and sailed to my destination. Cheaper too.

Ended up using only yellow cabs since this was not an isolated incident. Taxis ended up saving us $3-5 on each ride over Uber and the drivers were not hopelessly dependent on google maps.


Taxis were usually ok but hoping you don’t randomly get screwed over or worse was a horrible kind of lottery. Isn’t there a particular circle of hell in Dante for those who betray trust placed in them? I remember in NYC pre Uber certain times of day they wouldn’t take you to the airport.


The other issue being, in most cities, the argument was made to have high taxi fares but for it to be illegal to refuse rides based on distance/destination.

But the bargain was never 2-way in practice, the high fares stayed but the refusals remained.


I guess this makes sense, who is going to attempt to force their taxi driver into something they don’t want to do at the start of the journey? Even knowing I’m in the right legally, I don’t really want to be driven anywhere by someone pissed off at me.


I think the issue goes somewhat deeper than this.

For example, in Paris, it was pretty common for taxi drivers to refuse to take you somewhere, even though there's a "starting fare", which is quite high, and you'd think that only that could make it worth their while. This would especially happen late at night, when public transport is basically non-existent.

But taxis aren't just any random person with a car willing to drive people around. For example there are all kinds of arrangements done for them, such as dedicated lanes or authorization to use bus lanes. They have dedicated parking spots all over the city, etc.

So if we, as the public in the city, make those concessions to them, I'd expect something in return. To me, they're a public service much in the same way the metro or the bus service. Sure, they cost a lot more, but that's because I can get them to come exactly where I am, when I want, and drop me exactly where I want to go. I'm not sure people would be so understanding if a bus driver refused to drive because he didn't feel like it / the weather was bad / it was too hot / etc.


That's the crux for me, too. The time you're most likely to be rejected for a ride is after going out drinking, which is also when your safety most depends on getting a ride.


in Paris, it was pretty common for taxi drivers to refuse to take you somewhere

In London taxi drivers are notorious for never wanting to venture south of the river, but that is a matter of personal safety, that they are a public service doesn’t give anyone the right to compel them to do something ill-advised.


Not familiar with south London but might not the real reason be that in a lower income area people won’t hire them for the ride back. NYC cabbies have to drive through dangerous areas as a matter of course and there are more guns there.


Ok but what other business do you have to be afraid to piss someone off by hiring them to do their job?


I agree, but it doesn’t change the personal risk calculation


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


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?


Could be ripping people off still, in jail, dead, retired or bootcamp grad working in sf.

Creating a sad story to explain motiviations shouldn't be an exercise one does in a situation like this.


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?


> Why is this relevant? Rules and laws are there for a reason.

I agree.

> 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?

I think this is where you missed the point. It’s an empathy exercise. Where do _you_ think that taxi driver is, right now? What do you think their home looks like? Are they pleased with having pulled one over on that foreigner fare?

Their actions don’t have to be morally correct or even morally justifiable to be understandable.


If you want to signal your magnanimous virtues to the world, do it on your own dime. Nobody should be shamed into feeling sorry for someone that defrauded them.


In jail, hopefully.


People should not be in jail because one person's recounting of an encounter with them makes them sound like a thief.


Whoosh.


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.


Stories like this are exactly why the taxi cartels were decimated by ride sharing companies.


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.


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.


I asked one cab driver when I got in the cab if I could pay with card and informed them I didn't have cash on me. They said "ok".

When we got near the destination, the machine was broken. I said, no problem, stop the meter drive me to my bank's nearest atm so I don't have to pay fees (10 minutes out of the way), or stop the car and let me out here.

The machine started working again, all of a sudden.


In Paris they will drive you to an ATM.


Better not be on the meter.


In Paris, the trip to get to you is on the meter.


I mean the trip to the ATM.


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.


And also why I have zero sympathy for taxi drivers in the rideshare app revolution. As a rideshare customer I'm extremely happy that the price is stated upfront and I don't have to haggle, I only have to decide whether or not I want it at the presented price.

I've had enough share of rigged taxi meters that clock faster than normal, getting the runaround to a longer route, and lots of other tricks they have.


I like that too. Not having to haggle an not having to calculate price and “fair” tipping.

But I noticed the other day that takeaway.com, one of the major delivery food service in my country, is now adding a ”would you like to tip the delivery man ? +1 +5 +10” question after I have already paid. In a country with a better social protection than the US and better low-wages too. I don't like this trend, it has to be fought back.


In France, "a country with better social protection than the US", apps ask for a tip too.

In the Uber app it shows up after the trip / rating. I think the options are +1, +2, +5. Maybe there's a custom, I don't remember.

However, what surprises me, is that for example on Uber Eats, they ask for the tip before the delivery, at the end of the order. The way I see it, even in the US, the tip is supposed to at least take into account the quality of service. How can you judge that before you've been served?


I just had that experience tonight. Uber projected delivery at 8:15. They couldn’t get a driver until 9. I had already tipped. But since that money should/is going to the delivery driver, that wouldn’t have been his fault. He was assigned the delivery until 9. The whole process is screwed up based on the traditional model of one company providing most of the service and tips are, at least some what, shared.

Anyways they just need to get rid of tipping and bake it into the price already. I think the whole world is tired of it.


I totally agree. In the US they're just using it to hide some of the delivery costs from you, to present a screen where the total is a smaller number than what you will pay before you commit.

It's disingenuous, and I hate it. I'd MUCH rather they have a delivery fee of $6 (or whatever it needs to be to pay the driver fairly) and no tip instead of advertising $2 delivery and then come running back post-order asking for tip.


The same thing happened to me. It's illegal but they still do it.


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.


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.


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.


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.


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?


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.


3. Uber subsidizes their fares with. VC capital. And unsustainably so.


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.


The fact that Uber are still bleeding money after being established in most markets they still operate in ( others were sold), would indicate otherwise.



Yeah, more like:

1. VC Money

2. Will collapse unless they put the price up

3. In America there was some crazy medallion system

4. VCs are selling off their shares before the whole thing collapses


Drivers don't pay for special vehicles (London and NYC both require special vehicles for you to use). This also means you can use a more efficient vehicle so less fuel (all the Ubers here are Hybrids), cheaper maintenance etc.

No one runs away without paying at the end of the journey.

You never get robbed because you have no cash.

Very few people will vomit etc all over the back seat or damage the vehicle costing the driver. When they do, you've covered.

Insurance is handled before you're paid, so you get a bulk discount, pay with pre-tax money and only pay for the insurance you need.

The flexibility means you only have to work when there is actual demand and it suits you to. No more sitting alone in a cab with nothing to do for hours between rush hours, you can work a 9-5 and drive for uber on the weekends etc. Earning well is a lot less when it's a top-up on your other job than when this is all you have.


Increased volume.


Control, surveillance, and accountability.


Less downtime and inefficiency perhaps


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…


> 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.


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.


> 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.


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.


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.


> 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)

Seems we're quick to point out "moral hazards" in other cultures and just as quick to forget the obvious ones in our own.


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.


Sadly paywalled for $30.



Not yet on LibGen though I suspect it will be shortly.

http://libgen.rs/scimag/?q=10.1287%2Fmnsc.2020.3721


[flagged]


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.


It still makes for a great incentive to label any deaths they couldn't prevent a Covid death.


how did whataboutism suddenly creep into this thread?


Do the authors disclose any conflicts of interest?




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