Do Social Connections Reduce Moral Hazard? Evidence from the New York City Taxi Industry / C. Kirabo Jackson, Henry S. Schneider.

By:

Jackson, C. Kirabo

Contributor(s):

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w16279.Publication details: Cambridge, Mass. National Bureau of Economic Research 2010.Description: 1 online resource: illustrations (black and white)Subject(s):

Online resources:

Available additional physical forms:

Hardcopy version available to institutional subscribers

Abstract: This study investigates the role of social networks in aligning the incentives of economic agents in settings with incomplete contracts. We study the New York City taxi industry where taxis are often leased and lessee-drivers have worse driving outcomes than owner-drivers as a result of a moral hazard associated with incomplete leasing contracts. Using instrumental variables and fixed-effects analyses, we find that: (1) drivers leasing from members of their country-of-birth community exhibit significantly reduced effects of moral hazard; (2) network effects appear to operate primarily via social sanctions; and (3) network benefits can help to explain the organization of the industry in terms of which drivers and owners form business relationships.

Tags from this library: No tags from this library for this title. Log in to add tags.

Average rating: 0.0 (0 votes)

Holdings
Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w16279 (Browse shelf(Opens below))	Not For Loan

Total holds: 0

Collection: Colección NBER Close shelf browser (Hides shelf browser)

Previous	No cover image available	No cover image available	No cover image available	No cover image available	No cover image available	No cover image available	No cover image available	Next
Previous	nber w16276 Protection Reduction and Diversion: PTAs and the Incidence of Antidumping Disputes /	nber w16277 Does Culture Matter? /	nber w16278 Inside the Refrigerator: Immigration Enforcement and Chilling Effects in Medicaid Participation /	nber w16279 Do Social Connections Reduce Moral Hazard? Evidence from the New York City Taxi Industry /	nber w1628 Estimating Neonatal Mortality Rates from the Heights of Children: The Case of American Slaves /	nber w16280 The Insurance Value of State Tax-and-Transfer Programs /	nber w16281 Putting the Co in Education: Timing, Reasons, and Consequences of College Coeducation from 1835 to the Present /	Next

August 2010.

This study investigates the role of social networks in aligning the incentives of economic agents in settings with incomplete contracts. We study the New York City taxi industry where taxis are often leased and lessee-drivers have worse driving outcomes than owner-drivers as a result of a moral hazard associated with incomplete leasing contracts. Using instrumental variables and fixed-effects analyses, we find that: (1) drivers leasing from members of their country-of-birth community exhibit significantly reduced effects of moral hazard; (2) network effects appear to operate primarily via social sanctions; and (3) network benefits can help to explain the organization of the industry in terms of which drivers and owners form business relationships.