Sharing Means Caring? Hosts' Price Reaction to Rating Visibility

We empirically investigate how hosts on Airbnb, a popular peer-to-peer website for fee-based sharing of under-utilized space, adjust their prices once their offering gets a visible star rating for the first time. We use data for over 14,000 offerings from Airbnb which we collected for New York City. Our findings indicate that hosts whose offerings achieve star rating visibility significantly increase their prices by an average of 2.69 € more than hosts with comparable offerings who do not experience this rating visibility during the time of observation. Out of all offerings who achieve rating visibility, we identify the upper quartile of hosts to be the main driver of this price increase, whereas the first 75% percent show only a marginal price reaction. These results can serve as a first step towards understanding the motivation of people to provide assets to the sharing economy.