More Reviews May Not Help: Evidence from Incentivized First Reviews on Airbnb

Andrey Fradkin and David Holtz

Papers from arXiv.org

Abstract: Online reviews are typically written by volunteers and, as a consequence, information about seller quality may be under-provided in digital marketplaces. We study the extent of this under-provision in a large-scale randomized experiment conducted by Airbnb. In this experiment, buyers are offered a coupon to review listings that have no prior reviews. The treatment induces additional reviews and these reviews tend to be more negative than reviews in the control group, consistent with selection bias in reviewing. Reviews induced by the treatment result in a temporary increase in transactions but these transactions are for fewer nights, on average. The effects on transactions and nights per transaction cancel out so that there is no detectable effect on total nights sold and revenue. Measures of transaction quality in the treatment group fall, suggesting that incentivized reviews do not improve matching. We show how market conditions and the design of the reputation system can explain our findings.

Date: 2021-12
New Economics Papers: this item is included in nep-exp, nep-law, nep-mkt and nep-pay
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