Online marketplaces often contain information not only about products, but also about the people selling the products. In an effort to facilitate trust, many platforms encourage sellers to provide personal profiles and even to post pictures of themselves. However, these features may also facilitate discrimination based on sellers’ race, gender, age, or other characteristics.
Last week Michael Luca and I posted Digital Discrimination: The Case of Airbnb.com, in which we test for racial discrimination against landlords in the online rental marketplace Airbnb.com. We collected information about all Airbnb hosts in New York City, including their rental prices and the quality of their properties. We find that non-black hosts charge approximately 12% more than black hosts for the equivalent rental. These effects are robust when controlling for all information visible in the Airbnb marketplace, including even property photos.
Our findings highlight the risk of discrimination in online marketplaces, suggesting an important unintended consequence of a seemingly-routine mechanism for building trust. There is no fundamental reason why a guest needs see a host’s picture in advance of making a booking — nor does a guest necessarily even need to know a host’s name (from which race may sometimes be inferred). In other respects, Airbnb has been quite sophisticated in limiting the information available to hosts and guests on its platform — for example, AIrbnb prohibits (and runs software to prevent) hosts and guests from sharing email addresses or phone numbers before a booking is made, lest this information exchange let parties contract directly and avoid Airbnb fees. Given Airbnb’s careful consideration of what information is available to guests and hosts, Airbnb might consider eliminating or reducing the prominence of host photos: It is not immediately obvious what beneficial information these photos provide, while they risk facilitating discrimination by guests.