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Uber for Poop

https://www.npr.org/sections/goatsandsoda/2018/07/27/633171643/uber-for-poop-aims-to-break-up-senegals-septic-cartel

In Dakar, Senegal most people can’t flush their poop away, so people have septic tanks that need to be emptied pretty often. There are two solutions, either you hire a « baay pelle », a person that empties the tank with his shovel and bucket, and disposes of it in the street, or the more expensive option which is to call a giant vacuum truck, called a « toilet sucker ». Unfortunately, the truck drivers have formed a cartel, and have driven up the prices, this meant that people would rather get « baay pelle » and that implies dirty streets.
The Senegalese government decided to call in economists, one of whom, Molly Lipscomb (Prof. at the University of Virginia), devised a way to incentivize drivers to beat each other on prices, and destabilize the cartel. They set up a call center where you could call and post a job offer that was texted to different drivers, and you could see which driver could do the job for the lowest amount of money, it’s a sort of auction. Lipscomb found that it lowered the prices for the trucks by an average of 7 percent, and has increased completion in the septic tank emptying sector.

In how this relates to class, we studied different types of auctions and their dominant strategies. It seems as though the rule of thumb in this auction as a driver, is to bid a little above your minimum wage for the job, and gauge how much to inflate your bid depending on your knowledge of the behavior of other drivers because if you bid too high you might not get the job.

 

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