Anyone with the time and skills—driving running errands—can find customers who need these services. But new research shows how online marketplaces can work in ways that are anything but egalitarian They can inadvertently fuel racial discrimination. In Digital Discrimination The Case of Airbnb Benjamin G. Edelman and Michael Luca investigate the possibility of racial discrimination against people who advertise properties on Airbnb a popular online marketplace that lists temporary rooms and homes in some cities across countries.
THE RESEARCHERS FOUND THAT BLACK HOSTS WERE CHARGING APPROXIMATELY PERCENT LESS FOR RENTAL PROPERTIES THAN WERE NONBLACK HOSTS. Analyzing a data set that focuses on New York Chinese Overseas America Number Data City the company s biggest market the researchers found that black hosts charged approximately percent less for rentals than nonblack hosts—even when the properties were equivalent in terms of location and quality. How did the researchers find out the race of each host The same way potential guests do—they looked at the hosts profile pictures on the Airbnb website. In fact large profile pictures in online marketplaces were the inspiration for the research. In the early days of the Internet online marketplaces like eBay were relatively anonymous says Luca an assistant professor in.
Negotiation Organizations Markets unit at Harvard Business School. You just saw a seller s ID with a seller score or a buyer with a buyer rating. These days however profile pictures are commonplace. It s a phenomenon that Edelman attributes to Facebook. In fact many sites require customers to use F—not just marketplaces but media outlets as well. For instance ESPN and USATODAY both ask readers to sign in through Facebook in order to post a comment on a news story. If you log in to a site through Facebook they get your profile picture among other things says Edelman an associate professor and Marvin Bower Fellow at Harvard Business School.