This study by Teubner et al. looks at how reputation influences accommodation prices on Airbnb. Taking into account average rating scores, the number of reviews, ID verification, membership duration, Airbnb’s Superhost badge, and the number of accommodation photos, the authors find that most (but not all) measures lead to positive effects on price.
Airbnb hosts compete on accommodation size, location and other features, but also capitalize on their reputations to demand higher prices. Indeed, as this study shows, an increase by one star is associated with a price increase of nearly US$ 9. However, the vast majority (more than 95%) of Airbnb hosts already fall in the 4 to 5 star range. By looking at other components in Airbnb’s reputation system, Teubner et al. demonstrate the full economic value of the platform’s trust mechanisms.
Study highlights and key findings:
- An increase by one star in the rating score is associated with a price increase of US$ 8.91.
- A high number of reviews is negatively associated with price.
- Possession of Airbnb’s Superhost badge increases listing prices by US$ 2.97.
- Duration of membership drives listing prices by US$ .20 per month. A greater number of property photos is also positively associated with higher prices.