Working Paper: NBER ID: w31855
Authors: Aron Culotta; Ginger Zhe Jin; Yidan Sun; Liad Wagman
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.
Keywords: Airbnb; safety reviews; consumer behavior; online platforms; information design
JEL Codes: D83; L15; R3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| vicinity safety reviews (VSR) (R48) | guest bookings (Z30) |
| vicinity safety reviews (VSR) (R48) | occupancy rates (R21) |
| vicinity safety reviews (VSR) (R48) | average nightly prices (P22) |
| VSR from nearby listings (R33) | occupancy rates of focal listings (R21) |
| personal experience (VSR) (C90) | future bookings (Z30) |
| vicinity safety reviews (VSR) (R48) | crime statistics (K42) |