What your driver is thinking: How gig economy workers make decisions

A new study followed 8,000 drivers at a rideshare company and studied how they made decisions and responded to incentives.

Should I drive for Lyft? Should I switch to a totally new app for the day’s slow period? How long should I work today, and what times? When you can pick who you work for, make your own schedule, and juggle multiple apps, what’s the best course of action?

A new study, “The Impact of Behavioral and Economic Drivers on Gig Economy Workers,” discusses what motivates gig economy workers. The study followed 8,000 drivers at a ride-hailing company for the last year. Lead author Gad Allon, Wharton professor of operations, information and decisions appeared on the Knowledge@Wharton podcast to talk about some of the findings.

We now have the opportunity to “engage in freelance work at every type of scale – once a day, once a week, almost as a full-time job,” said Allon on the podcast. He predicts the gig economy will grow to $2.7 trillion by 2025.

But … “do we know how these employees actually behave? How they make decisions?” he added.

Allon mentioned three interesting behavioral findings from the study amongst drivers:

Money talks … sometimes. What we’ve seen is, the more money you offer them, the more likely they are going to work and the longer they are going to work.

Drivers work for a goal amount of money. “When they get closer to a certain income [that they had as an expected income], we see a surprising outcome – you pay them more, and they are less likely to work… They are trying to balance leisure, they are trying to balance family life … once they reach a certain level, the strong financial incentives become weaker.”

The inertia phenomenon. The longer people work, the longer they will continue to work, and the longer they work.

If companies know drivers’ behaviors, says Allon, they can design incentives around them.

Sheila McClear|is a reporter for Ladders and can be reached at smcclear@theladders.com.