Game theory makes it clear why anonymous cabs paid in cash will almost always provide worse service than a rating sensitive system.

The notion that people will be kind and nice because of social norms or "plain decency" or something is sentimental hogwash. People behave well when the system rewards them for doing so and penalises them for not.

Most of local cab companies in my city also let you rate a driver now, so it's not a unique selling point of Uber anymore.

When was the last time you rated a local cab? If no one uses the system it might as well not exist.

Last night, actually.