(The) signaling effect of group-type profile pictures in the sharing economy: the case of Airbnb

Abstract

Sharing economy platforms offer opportunities for sellers to generate profits by sharing idle assets to buyers. This transaction leads to the critical dependence of the buyer’s experience on the seller’s behavior. However, as the platform provides only limited information about the seller, buyers are having difficulty in predicting the seller’s opportunistic behavior, which is called seller uncertainty. While there is rich literature exploring the seller uncertainty within the scope of the traditional p2p market, little is known about the seller uncertainty in sharing economy, although the expanded role of the seller exacerbates the risk of uncertainty. Therefore, this paper aims to investigate the effect of seller uncertainty in sharing economy by using signaling effect theory. We utilized a deep learning-based face detection model to extract the number of faces from profile pictures of 14,799 hosts in Airbnb and analyzed the impact of pictures on occupancy rate. The result demonstrates that profile pictures have a signaling effect in sharing economy platforms. Moreover, by showing the moderating effect of the crime rate, this paper indicates that seller uncertainty in sharing economy involves concern for safety.