Do Lower-Quality Images Lead to Higher Demand on Airbnb?

41 Pages Posted: 31 Oct 2023

See all articles by Shunyuan Zhang

Shunyuan Zhang

Harvard University - Business School (HBS); Harvard University

Nitin Mehta

University of Toronto - Rotman School of Management

Param Vir Singh

Carnegie Mellon University - David A. Tepper School of Business

Kannan Srinivasan

Carnegie Mellon University - David A. Tepper School of Business

Date Written: September 30, 2023

Abstract

Prior research has shown that high-quality images increase the current demand for Airbnb properties. However, many properties do not adopt high-quality images even when offered for free by Airbnb. Our study provides an answer to this puzzling observation. We develop a structural model of demand and supply of Airbnb properties, where hosts strategically choose image quality for their properties. Using a one-year panel data from 958 properties in Manhattan, we find evidence that a host’s decision to use high-quality images entails a trade-off: high-quality images may attract more guests in the current period, but if the property does not live up to the expectations created by the image quality, then they risk disappointing guests. The guests would then leave bad no reviews at all, which would adversely affect future demand. Counterfactual policy simulations show that Airbnb could significantly increase its profits (up to 18.9%) by offering medium-quality images for free to hosts or providing free access to a choice between high-quality and medium-quality images. These policies help improve Airbnb's profits since they enable the hosts to upgrade their image quality to an extent that aligns with their property quality.

Keywords: Image Analytics; Sharing Economy; Deep Learning; Dynamic Structural Model; Professional Image Adoption

JEL Classification: M31, C45, C11, C36, L85, L10, R30

Suggested Citation

Zhang, Shunyuan and Mehta, Nitin and Singh, Param Vir and Srinivasan, Kannan, Do Lower-Quality Images Lead to Higher Demand on Airbnb? (September 30, 2023). Available at SSRN: https://ssrn.com/abstract=4588974 or http://dx.doi.org/10.2139/ssrn.4588974

Shunyuan Zhang (Contact Author)

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan Hall
Boston, MA 02163
United States

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Nitin Mehta

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Param Vir Singh

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States
412-268-3585 (Phone)

Kannan Srinivasan

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

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