Title

The Value of Time: Evidence from Auctioned Cab Rides

Author(s)

Nicholas Buchholz Nicholas Buchholz (Princeton University)

Laura Doval Laura Doval (Columbia University)

Jakub Kastl Jakub Kastl (Princeton University)

Filip Matejka Filip Matejka (CERGE-EI)

Tobias Salz Tobias Salz (Massachusetts Institute of Technology)

Abstract

We recover valuations of time using detailed data from a large ride-hail platform, where drivers bid on trips and consumers choose between a set of rides with different prices and waiting times. Leveraging a consumer panel, we estimate demand as a function of both prices and waiting times and use the resulting estimates to recover heterogeneity in the value of time at the individual level. We study the welfare implications of platform pricing policies that take advantage of this heterogeneity. In particular, we compare the consumers’, drivers’, and platform’s welfare under different forms of price discrimination. Taking into account drivers’ optimal reaction to the platform’s pricing policy, total surplus falls by 6% under personalized pricing relative to the current mechanism. However, total surplus grows by 33% compared to the case in which the platform does not incorporate consumer information into its pricing.

Creation Date

2022-06

Section URL ID

Paper Number

2022-22

URL

https://scholar.princeton.edu/sites/default/files/nbuchholz/files/vot.pdf

File Function

Jel

C73, D83, L90, R12

Keyword(s)

Value of time, demand in transportation markets, ride hail

Suppress

false

Series

13