EXPRESS: Owners’ Willingness to Accept in the Sharing Economy

Abstract

The sharing economy has become an increasingly widespread way for peers to rent out their owned goods to others seeking to rent them. This research investigates how providers (i.e., owners renting out their belongings) decide what price to charge, and identifies the provider WTA effect , where in the context of a peer-to-peer (P2P) collaborative consumption model, providers are willing to accept (WTA) less than renters (i.e., non-owners) are willing to pay (WTP). These findings diverge from prior research which has repeatedly demonstrated that owners typically demand more to part with their belongings than non-owners are willing to pay in a seller/buyer transaction (i.e., the endowment effect). The provider WTA effect is explained by providers having a more accessible empathy lens which in turn acts to dampen the accessibility of their exchange lens when renting out their item. This drives WTA below WTP. The effect is moderated when the renter is identified as a dissimilar transaction partner. This research provides actionable implications for providers and platforms.