Paper accepted at the Review of Economics and Statistics

In decentralized transportation markets, individual agents often make decisions with limited information, leading to increased search frictions, mismatches, and prolonged waiting times for both drivers and riders. It is frequently speculated, both in academic literature and in practice, that sharing real-time information with drivers would help reduce search frictions and improve travelers’ experience. Yet empirically confirming the causal effect of information provision in reducing search frictions has remained challenging.

In our latest paper (with Sumit Agarwal, Jussi Keppo, Long Wang, and Yang (Zoe) Yang), which is to appear in The Review of Economics and Statistics, we establish and quantify this causal effect by utilizing a unique natural experiment at Singapore’s Changi Airport, where multiple digital information boards were installed in 2009 to deliver information on current taxi queue length and flight arrival information (an App was later developed to provide the same information). The information provision reduces drivers’ waiting time by 10.77% and raises daily earnings by USD $3.70, as well as operational time by 6.2 minutes for airport-serving taxis. Notably, drivers with fewer prior airport pickups benefit more substantially from this information provision.

More details can be found in the full paper below: Information Provision and Search Frictions: Evidence from the Taxi Industry in Singapore

🔗 The Review of Economics and Statistics: link
🔗 Preprint: link