Safety Reviews on Airbnb: An Information Tale

Aron Culotta, Ginger Zhe Jin, Yidan Sun and Liad Wagman

No 31855, NBER Working Papers from National Bureau of Economic Research, Inc

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 a potential 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 personal 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) could hurt guests if they do not adjust their beliefs accordingly, and such removal can increase revenues from reservations on Airbnb, with positive sorting toward listings formerly with VSR. Conversely, highlighting VSR would generate opposite effects. However, the incentive to suppress VSR can be mitigated if guests have a rational expectation of average vicinity risk after all VSR are removed or if guests can learn from their own vicinity safety experience for a long enough time. 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.

JEL-codes: D83 L15 R3 (search for similar items in EconPapers)
Date: 2023-11
New Economics Papers: this item is included in nep-ind, nep-pay and nep-ure
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