Friday, September 9, 2016

Airbnb consider market design changes to reduce discrimination

The NY Times has the story:
Airbnb Adopts Rules in Effort to Fight Discrimination by Its Hosts

"Airbnb, based in San Francisco, said that it would institute a new nondiscrimination policy that goes beyond what is outlined in several anti-discrimination laws and that it would ask all users to agree to a “community commitment” starting on Nov. 1. The commitment asks people to work with others who use the service, “regardless of race, religion, national origin, disability, sex, gender identity, sexual orientation or age.”

In addition, the company plans to experiment with reducing the prominence of user photos, which have helped signal race and gender. Airbnb said it would also accelerate the use of instant bookings, which lets renters book places immediately without host approval."

There is a strong market design subtext to this story: Peter Coles, Airbnb's (new) chief economist, used to work at Harvard Business School, where some of his former colleagues conducted an experiment that helped focus on the possible discrimination problem.
Here's the current version of that paper:

Racial Discrimination in the Sharing Economy:Evidence from a Field Experiment
 Benjamin Edelman, Michael Luca, and Dan Svirsky
 September 4, 2016

Online marketplaces increasingly choose to reduce the anonymity of buyers and sellers in order to facilitate trust. We demonstrate that this common market design choice results in an important unintended consequence: racial discrimination. In a field experiment on Airbnb, we find that requests from guests with distinctively African-American names are roughly 16% less likely to be accepted than identical guests with distinctively White names. The difference persists whether the host is African-American or White, male or female. The difference also persists whether the host shares the property with the guest or not, and whether the property is cheap or expensive. We validate our findings through observational data on hosts’ recent experiences with African-American guests, finding host behavior consistent with some, though not all, hosts discriminating. Finally, we find that discrimination is costly for hosts who indulge in it: hosts who reject  guests are able to find a replacement guest only 35% of the time. On the whole, our analysis suggests a need for caution: while information can facilitate transactions, it also facilitates discrimination.

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