Entry Date:
November 3, 2015

The Design of Online Reputation Systems

Principal Investigator Andrey Fradkin

Reviews and other evaluations are used by consumers to decide what goods to buy and by firms to choose whom to trade with, hire, or promote. However, because potential reviewers are not compensated for submitting reviews and may have reasons to omit relevant information in their reviews, reviews may be biased. We use the setting of Airbnb to study the determinants of reviewing behavior, the extent to which reviews are biased, and whether changes in the design of reputation systems can reduce that bias. This first stage of the project uses large scale field experiments on Airbnb to measure the size of bias in reviews. The second stage uses these experiments to measure the effects of reviews on seller outcomes and overall market efficiency.