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Trust and Disintermediation: Evidence from an Online Freelance Marketplace

Grace Gu () and Feng Zhu ()
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Grace Gu: Harvard Business School
Feng Zhu: Harvard Business School, Technology and Operations Management Unit

No 18-103, Harvard Business School Working Papers from Harvard Business School

Abstract: As an intermediary improves trust between two sides of its market to facilitate matching and transactions, it faces an increased risk of disintermediation: with sufficient trust, the two sides may circumvent the intermediary to avoid the intermediary's fees. We investigate the relationship between increased trust and disintermediation by leveraging a randomized control trial on a major online freelance marketplace. Our results show that enhanced trust increases the chance for high-quality freelancers to be hired. When the trust level is sufficiently high, however, it also increases disintermediation, which offsets the revenue gains from the increase in the hiring of high-quality freelancers. We also identify heterogeneity across clients and freelancers in their tendencies to disintermediate.

Keywords: Disintermediation; Intermediary; Trust; Online Marketplace (search for similar items in EconPapers)
JEL-codes: L14 L86 O33 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2018-05
New Economics Papers: this item is included in nep-ict, nep-pay and nep-soc
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Citations: View citations in EconPapers (1)

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