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The Game Theory of Airbnb Reviews

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Founded in August of 2008 and based in San Francisco, California, Airbnb is a trusted community marketplace for people to list and book accommodations all around the world. Hosts can easily rent their homes and apartments to users to monetize their extra space, while users have an unique alternative to hotels at a variety of price points. Airbnb now operates in over 34,000 cities in 190 countries and has served over 60 million guests.

One of the main components of the website that both hosts and users rely on is the reviews system. After their stay, both parties are allowed to leave detailed accounts of their experiences which are attached to their listing and profile. Future users then use these reviews to evaluate the quality of the listing, and future hosts use these reviews to evaluate the cleanliness and respectfulness of the users. This system incentivizes hosts to go the extra mile and users to follow the listing’s rules. However, about a year ago, Airbnb changed the way that its review system operates.

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The old reviews system published reviews as soon as they were submitted. The problem with this is that the system allowed one party’s review to be viewed by the other before the other posted, creating a multitude of incentives against people writing honest evaluations. For example, if the host of a listing wrote a negative review about a guest and the guest saw it, the guest would be more likely to write a negative review about the host, regardless of what his or her true opinion was. On the other hand, if the host of a listing wrote a positive review about a guest and the guest saw it, the guest would be more likely to write a positive review about the host. The same would apply if the guest was the first to write the review. This ultimately resulted in a disproportionate amount of positive reviews, as experienced Airbnb-ers would quickly write positive reviews about each other in an attempt to game the system and get a positive review in return.

To more clearly outline the game theory involved in this story, one can think about the system this way. If the host gave the guest a positive review, the probability of the host receiving a positive review from the guest would be, let’s say, 0.8. However, if host gave the guest a negative review, the probably of the host receiving a positive review would be, let’s say, 0.2. In this situation, the dominant strategy for the guest is to give a positive review if he or she wants a positive review in return.

Aware of this phenomenon, Airbnb created a new reviews system that only publishes reviews after both the host and guest have submitted theirs. After this new system was put in place, users were much more likely to write honest reviews because they had no incentive to lie, as the other party wouldn’t see the review until he or she had written and submitted it. Consequently, negative reviews became much more abundant, more accurately reflecting the true experiences of the users.

This story is a great example of how users can game systems and adopt a strategy that more likely produces a favorable outcome. Designers, like that of Airbnb, need to be aware of these loopholes so they can create of a system that ultimately achieves what they originally intended it to.

Source: http://www.forbes.com/sites/sethporges/2014/10/17/the-strange-game-theory-of-airbnb-reviews/

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