“Do sharing economy firms refuse to share? Information asymmetries and consumer safety in short-term accommodation platforms”
by Burçin Güçlü
Universitat Ramon Llull
This study investigates the effect of information asymmetries on consumer safety in the context of sharing economy platforms. In view of the negative effect of information asymmetries on consumer choice via moral hazard, adverse selection, and monopoly power, we aim to understand whether sharing economy platforms decrease consumer safety through asymmetric information. Empirically, we use i) secondary data from Inside Airbnb portal with descriptive information on the availability of Airbnb’s safety amenities in Amsterdam, ii) primary data we collected through R on Airbnb’s safety amenities listings to assess the change in customers’ accrued value with lack of safety amenities and asymmetry of information, and iii) data from a survey experiment to capture the effect of increased safety information on consumer choice. We find that asymmetry in safety information leads the customer to choose the less safe short-term accommodation, and conclude that consumers pick safer short-term accommodations when provided with full safety information. While secondary data highlight the limitations of Airbnb in providing full safety information to customers, our primary data analysis confirms the decline in customer value in case of lack of safety amenities and asymmetry of information. We share further implications of our study for (government) intervention to counteract asymmetry of information, and company policy to insure consumer safety in short-term accommodation rentals.
Keywords: sharing economy platforms, consumer safety, consumer choice, asymmetric information, Airbnb.