Consumers’ trust in the sharing economy

Abstract

The sharing economy (SE) challenges consumers to participate in services characterised by information asymmetry, heterogeneous quality and risks of interacting with strangers who are consumers themselves, rather than traditional firms. Hence, the functioning of the SE requires consumers to trust the individual service provider and the platform facilitating the service. Reputation systems help signal quality and reduce information asymmetries. Platforms employ systems for consumers to rate service providers on a scale from 1 to 5 stars. Correspondingly, independent regulatory bodies rate the quality of a service provider’s establishment on a similar numeric scale—something unique to the short-term accommodation sector. In addition, the platform brand also conveys certain characteristics of the structural assurance of the SE platform. Through an online survey, 635 respondents were exposed to a between-subjects experimental vignette that altered the level of platform reputation and independent reputation systems. The resultant covariance-based structural equation modelling analysis revealed that: (i) consumers’ trust in service providers was heavily influenced by platform reputation systems, rather than independent reputation systems, (ii) platform reputation systems were more effective in building trust at higher levels, underscoring the prevalence of a higher rating floor, (iii) independent reputation systems were not statistically significant in influencing trust in the service providers, (iv) trust in the platform was significantly influenced by the platform brand, (v) trust in the service provider played a bigger role in influencing consumers’ propensity to participate in the SE, relative to trust in the platform, and (vi) trust in the service provider and trust in the platform partially mediated consumers’ propensity to participate in the SE.