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      Racial Discrimination in the Sharing Economy: Evidence from a Field Experiment
      25 Jan 2016Working Paper Summaries

      Racial Discrimination in the Sharing Economy: Evidence from a Field Experiment

      by Benjamin G. Edelman, Michael Luca and Daniel Svirsky
      Online platforms such as Airbnb create new markets by eliminating search frictions, building trust, and facilitating transactions. With the rise of the sharing economy, however, comes the prospect of racial discrimination that is unheard of in established platforms. The authors suggest changes to Airbnb’s site design to reduce or prevent discrimination.
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      Author Abstract

      Online marketplaces increasingly choose to reduce the anonymity of buyers and sellers in order to facilitate trust. We demonstrate that this common market design choice results in an important unintended consequence: racial discrimination. In a field experiment on Airbnb, we find that requests from guests with distinctively African-American names are roughly 16% less likely to be accepted than identical guests with distinctively White names. The difference persists whether the host is African American or White, male or female. The difference also persists whether the host shares the property with the guest or not, and whether the property is cheap or expensive. Discrimination is costly for hosts who indulge in it: hosts who reject African-American guests are able to find a replacement guest only 35% of the time. On the whole, our analysis suggests a need for caution: while information facilitates transactions, it also facilitates discrimination.

      Paper Information

      • Full Working Paper Text
      • Working Paper Publication Date: December 2015
      • HBS Working Paper Number: 16-069
      • Faculty Unit(s): Negotiation, Organizations & Markets
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      Michael Luca
      Michael Luca
      Lee J. Styslinger III Associate Professor of Business Administration
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