THE PRICE EFFECT OF TRUST SIGNALS ON AIRBNB LISTINGS

Abstract

This research paper posits that trust signals have price effects on Airbnb listings. Thus, this research seeks to explore the price effects of each trust signals namely – the number of reviews, response rate, the number of apartment photos, overall star ratings and Superhost status. With the overarching aim in place, the paper sets out to investigate the price determinants of Airbnb listings. Secondly, it seeks to investigate the importance of online trust in the peer-to peer (P2P) platforms. Lastly, to understand the significance of each trust signal to the Airbnb users and whether it corresponds to its price effect respectively. Through this study, it was determined that only one out of five trust signals, that is Superhost status had positive, statistically significant effect on listing price in all three regression models. The number of reviews had a statistically significant positive effect on Airbnb pricing but in only one of regression models conducted. Secondly, it was observed that both the number of bedrooms and flexible cancellation policy have a significant price effect and translate into higher price premium as compared to Superhost status. Lastly, the survey responses did not correspond with the empirical findings from the regression models. While the Superhost status translate into a higher price premium, it had low scores in in terms of importance for purchase decision and justification for price premium. Conversely, reviews viewed as significant element as a price determinant and as trust indicator to consumers, it had minimal impact on listing price.