The Influence of Platform Inspection Disclosure on Sharing Economy: Evidence from Unstructured Data
48 Pages Posted: 11 Sep 2017 Last revised: 21 May 2020
Date Written: May 20, 2020
The sharing economy has experienced rapid growth in recent years. Despite the social and economic impact, the sharing economy platform suffers from information asymmetry and a lack of government enforcement. Apart from customer reviews, platform disclosure is also a valuable source to provide quality signals. While most platforms use badges to help with consumer decisions, more platforms have started disclosing picture information. We investigate how picture disclosure would influence the consumer behavior and the role of platform disclosure among other quality-enhancing mechanisms such as reputation and market competition. Our analysis is based on the data from a large peer-to-peer meal-sharing platform in China. The platform conducts onsite hygiene inspection to evaluate the suppliers' hygiene quality and discloses kitchen pictures as the hygiene quality signal. We integrate an econometric analysis method with deep-learning and computer-vision techniques and find that, although the disclosure leads to an overall sales increase, suppliers with a passing but relatively low hygiene quality suffers from a sales decrease. Besides, disclosing images can create misinterpretation due to the noise in the quality signal, resulting in a non-monotonic sales impact as related to the platform evaluated hygiene quality. We also find that the effect is attenuated when market competition is intense or when the supplier's reputation on hygiene quality is high. Our work extends the previous studies, which focus on the positive role of platform disclosure, by highlighting that the informative effect of disclosing pictures overweighs the qualification effect and that the noise in pictures can still lead to suboptimal outcomes. It also integrates the enforcement method from the three main parts of the sharing economy ecosystem suppliers in terms of market competition, consumers in terms of online review, and the platform in terms of picture disclosure. Business and technical contributions are also discussed.
Keywords: platform disclosure, picture disclosure, sharing economy, quality signal, deep learning
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