RT Dissertation/Thesis
T1 Essays on reputation in online marketplaces
A1 Rossi, Michelangelo
AB Would you ever rent a house you have never seen; whose owner you have never met; in a cityyou have never visited? And again: would you ever pay upfront to a person you do not know,and you will never meet, who promise to deliver an object you have never seen? A few decadesago the answers to these questions would have been negative for most customers. Conversely,nowadays millions of users rely on digital platforms, such as Airbnb and eBay, to get serviceswith the same characteristics as those described by the previous two questions. How was thatpossible? How did users around the world start to trust each other after millennia of skepticismand malevolence?An answer to such questions relies on the innovative way digital marketplaces use to reducethe asymmetry of information between parties: review systems. In almost all digital platforms,users can review the services they have experienced providing new pieces of information toprospective users. Accordingly, reviews reduce the uncertainty about sellers' quality since eachfeedback increases the precision of buyers' estimates. Besides, reviews also discipline sellers' ongoingbehavior with the potential punishment of negative feedback. Still, signaling quality andmonitoring sellers' behavior are two separate tasks. From a microeconomic perspective, reviewsreduce adverse selection effects by signaling sellers' quality, whereas monitoring behavior affectsmoral hazard issues.In this dissertation I study the power, and the limits, of review systems to reduce thesetwo types of asymmetry of information: adverse selection and moral hazard. In the two chaptersof this thesis, I examine both signaling and monitoring tasks.1In the first chapter, How Does Competition Affect Reputation Concerns? Theory andEvidence from Airbnb, I show how changes in the number of close competitors affect the powerof reputation to induce sellers to exert effort. The impact of competition on sellers' incentives istheoretically ambiguous. More competition disciplines sellers, but, at the same time, it erodesreputational premia. This paper identifies empirically whether one effect dominates the otherusing data from Airbnb. To guide the empirical analysis, I develop a model of reputation withfrictional matching between the two sides of the market. Here the relative number of hosts andguests affects the value of building a reputation through effort. In this specific framework, morecompetition depresses hosts' profits and leads hosts to reduce effort. I test the model's predictionexploiting a change in regulation for Airbnb listings effective in San Francisco in 2017. I identifya negative causal effect of competition on ratings about hosts' effort. These findings suggest that more competition may erode incentives for high-quality services in frictional marketplaceswhere sellers' performances depend on reputation.In the second chapter, Quality Disclosures and Disappointment: Evidence from the AcademyAwards, I study the impact of quality disclosures on buyers' rating behavior using data from anonline recommender system. Disclosures may alter expectations on sellers' quality and a ectbuyers' rating behavior. In particular, if buyers' utility depends on a reference point inducedby their expectations, a positive disclosure of quality such as an award may lead to buyers' disappointmentand it negatively inuences their ratings. I identify the disappointment effect inmoviegoers' ratings originated from the rise in expectations due to movies' nominations for theAcademy of Motion Picture Arts and Sciences awards. I control for the selection of moviegoerswho watch and rate movies before or after nominations with a non-parametric matching technique.After nominations, ratings for nominated movies significantly drop relative to ratingsfor movies that were not nominated. This short-term disappointment effect reduces the ratingpremium of nominated movies by more than five percent.1. reviewed the economic literature regarding the role of review systems in digital platforms in AsymmetricInformation and Review Systems: The Challenge of Digital Platforms published in 2018 as a chapter of thebook Economic Analysis of the Digital Revolution (edited by Prof. Juan Jos e Ganuza and Prof. Gerard Llobet).
YR 2020
FD 2020-07
LK http://hdl.handle.net/10016/31176
UL http://hdl.handle.net/10016/31176
LA eng
DS e-Archivo
RD 28 abr. 2024