Reducing Discrimination with Reviews in the Sharing Economy: Evidence from Field Experiments on Airbnb

Abstract

Recent research has found widespread discrimination by hosts against guests of certain races in online marketplaces. In this paper, we explore ways to reduce such discrimination using online reputation systems. We conducted four randomized field experiments among 1,801 hosts on Airbnb by creating fictitious guest accounts and sending accommodation requests to them. We find that requests from guests with African American–sounding names are 19.2 percentage points less likely to be accepted than those with white-sounding names. However, a positive review posted on a guest’s page significantly reduces discrimination: when guest accounts receive a positive review, the acceptance rates of guest accounts with white- and African American–sounding names are statistically indistinguishable. We further show that a nonpositive review and a blank review without any content can also help attenuate discrimination, but self-claimed information on tidiness and friendliness cannot reduce discrimination, which indicates the importance of encouraging credible peer-generated reviews. Our results offer direct and clear guidance for sharing-economy platforms to reduce discrimination. This paper was accepted by Vishal Gaur, operations management.

The effect of the Covid-19 on sharing economy activities

“…Racial discrimination is a serious concern in the rapidly growing SE ( Cheng and Foley, 2018 ). Indeed, a recent study of 1801 Airbnb hosts found that those with African-American-sounding names were 19% less likely to be accepted as guests than those with white-sounding names ( Cui et al., 2020 ).…”

Reputation systems and recruitment in online labor markets: insights from an agent-based model

“…Reputation systems have been previously equated with the "invisible hand" that rewards good producers while punishing poor ones [24, p. 53]. Indeed, research shows that reputation systems can offset social biases among a large heterogeneous and independent population of users at online marketplaces [1,12]. However, processes of reputation formation can also have unintended consequences that might be socially and individually undesirable [27].…”

Racial disparities in the sharing economy: Evidence from more than 100,000 Airbnb hosts across 14 countries

“…These results suggest that even subtle cues to a person's race can influence economic decisions. Subsequent studies have demonstrated that these effects can be caused by various cues that indicate a person's race, such as names (Cui et al, 2020;Edelman et al, 2017;Farajallah et al, 2016;Zussman, 2013) and profile photos (Edelman & Luca, 2014;Jaeger et al, 2019). Moreover, racial disparities have been observed in various peer-to-peer markets, including eBay (Ayres et al, 2015), Uber (Ge et al, 2016), and online markets for used cars (Zussman, 2013).…”