| Abstract: |
Online reviews are typically written by volunteers and, as a consequence,
information about seller quality may be under-provided in digital
marketplaces. We study the extent of this under-provision in a large-scale
randomized experiment conducted by Airbnb. In this experiment, buyers are
offered a coupon to review listings that have no prior reviews. The treatment
induces additional reviews and these reviews tend to be more negative than
reviews in the control group, consistent with selection bias in reviewing.
Reviews induced by the treatment result in a temporary increase in
transactions but these transactions are for fewer nights, on average. The
effects on transactions and nights per transaction cancel out so that there is
no detectable effect on total nights sold and revenue. Measures of transaction
quality in the treatment group fall, suggesting that incentivized reviews do
not improve matching. We show how market conditions and the design of the
reputation system can explain our findings. |