Do social connections reduce moral hazard?
Subtitle: evidence from the New York City taxi industry
By: C. Kirabo Jackson, Henry S. Schneider
Contributors: Schneide, Henry S.; National Bureau of Economic Research
Series: NBER working paper series -- working paper 16279; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 16279.
Publisher: National Bureau of Economic Research
Published: 2010
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "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"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 9/28/2010.

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