January 2023
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12 Reads
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3 Citations
SSRN Electronic Journal
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January 2023
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12 Reads
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3 Citations
SSRN Electronic Journal
January 2023
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15 Reads
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1 Citation
SSRN Electronic Journal
September 2021
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79 Reads
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66 Citations
Marketing Science
We study the effect of Airbnb’s smart-pricing algorithm on the racial disparity in the daily revenue earned by Airbnb hosts. Our empirical strategy exploits Airbnb’s introduction of the algorithm and its voluntary adoption by hosts as a quasinatural experiment. Among those who adopted the algorithm, the average nightly rate decreased by 5.7%, but average daily revenue increased by 8.6%. Before Airbnb introduced the algorithm, White hosts earned $12.16 more in daily revenue than Black hosts, controlling for observed characteristics of the hosts, properties, and locations. Conditional on its adoption, the revenue gap between White and Black hosts decreased by 71.3%. However, Black hosts were significantly less likely than White hosts to adopt the algorithm, so at the population level, the revenue gap increased after the introduction of the algorithm. We show that the algorithm’s price recommendations are not affected by the host’s race—but we argue that the algorithm’s race blindness may lead to pricing that is suboptimal and more so for Black hosts than for White hosts. We also show that the algorithm’s effectiveness at mitigating the Airbnb revenue gap is limited by the low rate of algorithm adoption among Black hosts. We offer recommendations with which policy makers and Airbnb may advance smart-pricing algorithms in mitigating racial economic disparities.
January 2021
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153 Reads
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17 Citations
SSRN Electronic Journal
... The home-sharing economy involves uncertainty and information asymmetry between peer providers and customers, and photos can reduce the uncertainty by heightening social presence and the ability to visualize the experience (Ert, Fleischer, & Magen, 2016). Customers in the P2P context rely heavily on photos to make purchase decisions (Zhang, Mehta, Singh, & Srinivasan, 2019). Prior studies have tested several effects involving the photos of peer providers and properties. ...
January 2023
SSRN Electronic Journal
... To mitigate this threat, researchers and practitioners advocate an active, explicit learning process and increased engagement in addition to the implicit ad-hoc learning that takes place organically through the use of AI (Fügener et al. 2021;Jussupow et al. 2021;Lebovitz, Lifshitz-Assaf, and Levina 2022;Zhang, Mehta, et al. 2021;Zhou and Chen 2019). This not only applies to the users of the systems, but also the AI developers who can intentionally or unintentionally steer domain users' learning due to the way they design recommendation algorithms, provide information, or configure the AI application (Bansal et al. 2019a;Fügener et al. 2021). ...
September 2021
Marketing Science
... Race significantly shapes users' perceptions and trust in AI (M. K. Lee & Rich, 2021;S. Zhang et al., 2021). We argue that Non-White users in America are more likely to experience algorithmic aversion or automation bias compared to White users. ...
January 2021
SSRN Electronic Journal