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Use of Gratuities a Win-Win for Uber: Professor Anthony Gill in Fortune Magazine

Submitted by Caterina Rost on May 2, 2017 - 10:30pm
Anthony Gill
Anthony Gill

UW Political Science Professor Anthony Gill authored a commentary discussing the tipping of Uber drivers for Fortune Magazine. The current debate “within the service industry and amongst government regulators” is about whether to require “ride-share companies such as Uber to include an option for tips on their customers’ receipts.” In the article, Gill argues that “drivers’ income aside, the study of economics provides a subtler explanation [for allowing tipping] that executives at Uber should wisely heed as a means of improving their business.” Gratuities, Gill points out, serve as “an ingenious solution to the principal-agent problem,” i.e.  the problem that “a principal (employer) and agent (employee) have slightly diverging interests, and [that] the principal must devise a means of getting the agent to act in her best interests.” Professor Gill goes on to lay out how gratuities solve the principal agent problem and then concludes that in the case of Uber, “the use of gratuities is a win-win-win situation for the Uber brand, pleasant drivers, and the paying customer.”   

The article titled “Uber Would Be Wise to Let Passengers Tip” appeared on April 24, 2017 in Fortune Magazine. Fortune is a national business magazine that was founded in 1929.