The impact of qualitative reviews in online markets: Empirical and experimental evidence on racial statistical discrimination

Stage: Programming the experiment

Authors: Noriko Amano-Patiño, Konstantinos Ioannidis, James Morris

Abstract: We investigate the role of reviews in statistical discrimination in the sharing economy (specifically in online rental markets). Using a controlled experiment in an Airbnb-like setting, we measure how quantitative and qualitative customer review information affects accommodation demand across minority and non-minority hosts. We create fictitious listings using scraped data from Airbnb and systematically vary host characteristics (through photos and names), the number of available customer reviews, and the informativeness and quality of the available reviews. Our experimental design consists of three between participants treatments: one treatment varying host race (minority/non-minority) and the number of reviews (few/many, keeping quality of reviews fixed), one varying host race and informativeness of reviews when all reviews are positive, and another treatment varying host race and review informativeness when the reviews include one negative. This approach allows us to isolate the specific mechanisms through which customer reviews influence statistical discrimination. Our findings will provide insights for platform design to reduce racial discrimination in the sharing economy, complementing existing observational studies on discriminatory behaviour in online markets.