Safety Reviews on Airbnb: An Information Tale
January 25, 2022 Ginger Zhe Jin

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Speaker: Ginger Zhe Jin is currently Professor of Economics at the University of Maryland, College Park and fellow of Luohan Academy. She is also the ADVANCE Professor of the College of Behavioral and Social Sciences at the University. Her research focuses on information asymmetry among economic agents and how to provide information to overcome the information problem. Her research has been published in leading economics, management and marketing journals.


Paper: https://www.nber.org/papers/w31855



Abstract: Consumer reviews, especially those expressing concerns of product quality, are crucial for the credibility of online platforms. However, reviews that criticize a product or service may also dissuade buyers from using the platform, creating an incentive to blur the visibility of critical reviews. Using Airbnb and official crime data in five major US cities, we find that both reviews and self experiences concerning the safety of a listing's vicinity decrease guest bookings on the platform. Counterfactual simulations suggest that a complete removal of vicinity safety reviews (VSR) would hurt guests but increase revenues from reservations on Airbnb, with positive sorting towards listings formerly with VSR. Conversely, incorporating VSR in a listing's overall ratings or highlighting VSR could generate opposite effects. Either way, the interests of consumers are not always aligned with the interests of a revenue-centric platform. Because VSR are more closely correlated with official crime statistics in low-income and minority neighborhoods, our findings suggest that suppressing or highlighting VSR would have different effects on different neighborhoods.


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