Do you mind me paying less? Measuring Other-Regarding Preferences in the Market for Taxis

Abstract: 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 drive 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 or not 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) that 27% of drivers complete the journey. Evidence of out-group negativity against black testers is also reported. In order to link our empirical analysis to behavioural 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 shed further light on how discrimination can manifest itself within our preferences.

Biography: Brit Grosskopf joined the University of Exeter Business School as a Professor of Economics in September 2013, she is the current head of the Economics department. She completed her PhD dissertation Social Preferences and Learning in Experimental at the Universitat Pompeu Fabra, Barcelona, in 2000. She then spent three years at Harvard Business School, where she was a post-doc with Al Roth. Brit then took a tenure-track job at Texas A&M University where she was granted tenure in 2009. She moved to the University of Birmingham as a Professor in Experimental Economics in 2011, where she founded the Birmingham Experimental Economics Laboratory (BEEL) of which she was the Director until she joined Exeter.