Author Abstract
As an intermediary improves trust between two sides of its market to facilitate matching and transactions, it faces an increased risk of disintermediation—with sufficient trust, the two sides may circumvent the intermediary to avoid the intermediary’s fees. We investigate the relationship between increased trust and disintermediation by leveraging a randomized control trial on a major online freelance marketplace. Our results show that enhanced trust increases the chance for hiring high-quality freelancers. When the trust level is sufficiently high, however, it also increases disintermediation, which offsets the revenue gains from the increase in hiring high-quality freelancers. We also identify heterogeneity across clients and freelancers in their tendencies to disintermediate.
Paper Information
- Full Working Paper Text
- Working Paper Publication Date: May 2018
- HBS Working Paper Number: HBS Working Paper #18-103
- Faculty Unit(s): Technology and Operations Management
