Safety Reviews on Airbnb: An Information Tale

Abstract

Consumer reviews, especially those expressing concerns of product quality, are crucial for the credibility of online platforms. However, reviews that criticize a product or service may also dissuade buyers from using the platform, creating a potential incentive to blur the visibility of critical reviews. Using Airbnb and official crime data in five major U.S. cities, we find that both reviews and personal experiences concerning the safety of a listing’s vicinity decrease guest bookings on the platform. Counterfactual simulations suggest that a complete removal of vicinity safety reviews (VSRs) could hurt guests if they do not adjust their beliefs accordingly, and such removal can increase revenues from reservations on Airbnb, with positive sorting toward listings formerly with VSRs. Conversely, highlighting VSRs would generate opposite effects. However, the incentive to suppress VSRs can be mitigated if guests have a rational expectation of average vicinity risk after all VSRs are removed or if guests can learn from their own vicinity safety experience for a long-enough time. Because VSRs are more closely correlated with official crime statistics in low-income and minority neighborhoods, our findings suggest that suppressing or highlighting VSRs would have different effects on different neighborhoods.