Reviews and price on online platforms: Evidence from sentiment analysis of Airbnb reviews in Boston

Abdelaziz Lawani, Michael Reed, Tyler Mark and Yuqing Zheng

Regional Science and Urban Economics, 2019, vol. 75, issue C, 22-34

Abstract: There is a growing interest in deriving value from user-generated comments and reviews online. For businesses and consumers using online platforms, the reviews serve as quality metrics and influence consumers purchasing decision. This study examines the relationship between guests' reviews, used as a proxy for quality, and the price set by hosts on the Airbnb platform in Boston. Using sentiment analysis to derive the quality from the reviews and a hedonic spatial autoregressive model applied to rental room prices on Airbnb, we find that prices are strategic complements and are influenced by the review score, the characteristics of the room, and the features of the neighborhood. The marketing implication is that consumers respond to the contents of online reviews, in addition to customer ratings. Policies that improve the quality of the room for one host will have a spillover effect on the price of rooms offered by other hosts.

Keywords: Airbnb; Price competition; Reviews; Sentiment analysis; Spatial hedonic price (search for similar items in EconPapers)
JEL-codes: D41 L11 R32 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:75:y:2019:i:c:p:22-34

DOI: 10.1016/j.regsciurbeco.2018.11.003

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