Home Sharing Economy : Reputation Badge and Hosts Competition

E-commerce and other online businesses require the trust between participants. In order to provide users with useful information, many online platforms builds their own reputation systems. Within different forms of reputation system, a reputation badge is informative and could significantly affect different players in the ecosystem. On the biggest home sharing economy platform, Airbnb, the platform grants superhost badge to those who meet certain requirements. The badge could possibly help the owners to stand out in the competition with other hosts. However, all the hosts could adjust its charged price to increase sales probability for a higher revenue. This paper does not study the solo impact of the reputation badge. Instead, we focus on how the reputation badge moderates the impacts of hosts' behaviors (price adjustment). In addition, we study how the reputation badge works differently under different levels of competition. After controlling for the potential sample selection bias, we find out that owning a reputation badge softens the negative effect of charging a higher price. If an area has more available listings (more competitors), owning a superhost badge could help a listing more in terms of sales probability. This could be explained by the customer's decision process when making a purchase of accommodation. Further, we distinguish between the available listings offered by superhosts and non-superhosts and find out different interaction effects with the reputation badge