Shared Lodging and Customer Preference: Theory and Empirical Evidence from Airbnb

35 Pages Posted: 10 Mar 2018 Last revised: 7 Jul 2020

See all articles by Yao Cui

Yao Cui

Cornell University - Samuel Curtis Johnson Graduate School of Management

A. Yesim Orhun

University of Michigan, Stephen M. Ross School of Business

Ming Hu

University of Toronto - Rotman School of Management

Date Written: July 3, 2020

Abstract

An important difference between lodging sharing economy marketplaces (e.g., Airbnb) and traditional hotels is that the guest may be sharing the property with a local host. While shared properties are on average cheaper compared to listings where the guest occupies the entire (and hence larger) space of the property, guests may derive non-price utilities from the shared living feature. In this paper, we show that guests may derive utility from shared lodging above and beyond the price savings, and that this utility has meaningful implications on the sharing economy. Using Airbnb as a relevant application, we first provide the empirical evidence that an exogenous shock that changes the guests' desire for shared living has a direct bearing on listing transactions. We then theoretically investigate the implications of such a customer preference for shared living on the sharing economy platform and the social planner.

Keywords: sharing economy; Airbnb; causal inference; natural experiment; price competition model

JEL Classification: C23, D03, D4, D6, L83, M21, M31, O35

Suggested Citation

Cui, Yao and Orhun, A. Yesim and Hu, Ming, Shared Lodging and Customer Preference: Theory and Empirical Evidence from Airbnb (July 3, 2020). Available at SSRN: https://ssrn.com/abstract=3136138 or http://dx.doi.org/10.2139/ssrn.3136138

Yao Cui (Contact Author)

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

A. Yesim Orhun

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

Ming Hu

University of Toronto - Rotman School of Management ( email )

105 St. George st
Toronto, ON M5S 3E6
Canada
416-946-5207 (Phone)

HOME PAGE: http://ming.hu

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
668
Abstract Views
3,355
rank
46,349
PlumX Metrics