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Service Quality on Online Platforms: Empirical Evidence about Driving Quality at Uber

Author

Listed:
  • Athey, Susan

    (Stanford U)

  • Castillo, Juan Camilo

    (U of Pennsylvania)

  • Chandar, Bharat

    (Stanford U)

Abstract

The rise of marketplaces for goods and services has led to changes in the mechanisms used to ensure high quality. We analyze this phenomenon in the Uber market, where the system of pre-screening that prevailed in the taxi industry has been diminished in favor of (automated) quality measurement, reviews, and incentives. This shift allows greater flexibility in the workforce but its net effect on quality is unclear. Using telematics data as an objective quality outcome, we show that UberX drivers provide better quality than UberTaxi drivers, controlling for all observables of the ride. We then explore whether this difference is driven by incentives, nudges, and information. We show that riders’ preferences shape driving behavior. We also find that drivers respond to both user preferences and nudges, such as notifications when ratings fall below a threshold. Finally, we show that informing drivers about their past behavior increases quality, especially for low-performing drivers.

Suggested Citation

  • Athey, Susan & Castillo, Juan Camilo & Chandar, Bharat, 2024. "Service Quality on Online Platforms: Empirical Evidence about Driving Quality at Uber," Research Papers 3894, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:3894
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    File URL: https://www.gsb.stanford.edu/faculty-research/working-papers/service-quality-gig-economy-empirical-evidence-about-driving
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    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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