Do Emotions Sell? The Impact of Emotional Expressions on Sales in Space-Sharing Economy

Abstract

The digital technology underlying the concept of Industry 4.0 has brought new disruptive changes to the economy. As an innovative service model, the unique characteristics of the space-sharing economy require the understanding of emotional and psychological aspects in managing such a disruptive service model. We empirically examine the impact of unstructured emotional information that service providers offer (i.e., marketer-generated content) on the popularity and sales of services in space-sharing platforms (e.g., Airbnb) above and beyond objective qualities such as guest ratings or the size and amenities of the properties. For this, we leverage a unique dataset of a large-scale sample of Airbnb listings from New York City (NYC). The results of a panel analysis and a series of robustness checks reveal a curvilinear association between the affective expression of service providers and the sales of their services, that is, the effect of emotional expressions is positive at low levels, but it diminishes at high levels. To address the potential endogeneity, we use a 2SLS-IV approach, and the results validate our findings. Moreover, we conduct a randomized experiment to further establish causal inference. This study makes valuable contributions to the literature on service operation management and the sharing economy. Our findings shed light on how operations managers and service providers can use emotional information in space-sharing platforms. We provide practical examples to guide their actions. These insights also have implications for other platform owners and users to leverage emotional information and improve outcomes.