The Subtle Psychology And Economics Of Taxi Fares

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Kwabena Donkor, a former taxi driver and now a Stanford assistant professor of marketing, accessed a dataset of 1 billion credit card payments for New York City taxi trips to delve into customer behaviour. As predicted, 97% of customers abided by the norm of giving a tip. However, whilst 60% of customers would choose a pre-set option of 20%, 25%, or 30%, when the total fare increased, the customers were less willing to use a pre-set option, opting instead to choose their own—likely less significant—tip amount. Read full article here

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