In Whose Bed Shall I Sleep Tonight? The Impact of Transaction-Specific vs. Partner-Specific Information on Pricing in a Sharing Platform

Sharing platforms such as Airbnb provide rich information on the good or service to be exchanged, as well as elaborate mechanisms to protect against fraud. Thus, one could argue that contracts concluded via such platforms achieve a high level of completeness. According to economic theory, the identity of transaction partners should therefore be more or less irrelevant.

Yet, these platforms often also provide an elaborate rating system and reveal considerable information about the transaction partners. These features are often explicitly described as tools to increase trust between the transaction partners, which would not be important in a complete contract setting.

In this paper, we empirically analyze whether personal information about hosts provided in Airbnb actually influences prices on that platform using two different data sets. Results indicate that partner-specific information in fact has only a comparatively weak influence on prices, and that the importance of premise-specific vs. partner-specific information varies with the type of premise being rented.