Value for Money and Selection: How Pricing Affects Airbnb Ratings

Christoph Carnehl (), Maximilian Schaefer, Andre Stenzel and Kevin Ducbao Tran ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: We investigate the impact of prices on ratings using Airbnb data. We theoretically illustrate two opposing channels: higher prices reduce the value for money, worsening ratings, but they increase the taste-based valuation of the average traveler, improving ratings. Results from panel regressions and a regression discontinuity design suggest a dominant value-for-money effect. In line with our model, hosts strategically complement lower prices with higher effort more when ratings are relatively low. Finally, we provide evidence that, upon entry, strategic hosts exploit the dominant value-for-money effect. The median entry discount of seven percent improves medium-run monthly revenues by three percent.

Keywords: Rating Systems; Dynamic Pricing; Asymmetric Information (search for similar items in EconPapers)
JEL-codes: D18 D25 D47 D82 (search for similar items in EconPapers)
Pages: 51
Date: 2023-04
New Economics Papers: this item is included in nep-pay
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Related works:
Working Paper: Value for Money and Selection: How Pricing Affects Airbnb Ratings (2024)
Working Paper: Value for Money and Selection: How Pricing Affects Airbnb Ratings (2022)
Working Paper: Value for Money and Selection: How Pricing Affects Airbnb Ratings (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2023_411

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