Value for Money and Selection: How Pricing Affects Airbnb Ratings

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

Bristol Economics Discussion Papers from School of Economics, University of Bristol, UK

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.

Date: 2022-08-31
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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 (2023)
Working Paper: Value for Money and Selection: How Pricing Affects Airbnb Ratings (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:bri:uobdis:22/771

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