With a nod towards FT Alphaville's Izabella Kaminska, who's dug deeper into this stuff than I have, from Triple Pundit, August 21
What Malcolm Gladwell Misses with Millennials, Trust and the Sharing Economy
Last month in a keynote speech, Malcolm Gladwell presented an interesting paradox: Why are levels of trust among Millennials at all time low while services based on trust, like Airbnb and Uber, are flourishing?
Gladwell suggested two possible explanations – either the mechanisms generating trust in sharing economy platforms aren’t that strong as we think they are, or Millennials just don’t tell the truth in surveys.
He then goes on to explain that you need to look not at the data, but at the context. In this case, Gladwell says the right context is the impressive decrease in crime in the U.S., which gets young people to be more trustful of people. Therefore he believes the second explanation is the right one – Millennials are just bullshiting (aka not saying the truth) when asked about trusting others in surveys.
I believe Gladwell could be wrong. There is actually a third explanation he ignores, which could better explain this paradox.
First, why this paradox is important? “It strikes me that you kind have to make sense of this paradox because unless you do, you have no idea whether the business models behind these new companies in the trust economy are real. If it is in fact true that Millennials don’t trust anyone or anything then Airbnb and Uber are on really really shaky ground,” Gladwell explained. I agree with him on this point.
However, what he misses is that Millennials could actually trust strangers while using sharing economy services like Airbnb, Lyft or DogVacay, but these high levels of trust in these transactions don’t translate to higher levels of trust in strangers once these transactions are over. In other words, what happens in the sharing economy stays in the sharing economy.
I believe the sharing economy has done a pretty good job of creating and developing mechanisms that enable us to trust strangers with our most valuable assets, from our car and apartment to a beloved pet. “It’s a digital re-creation of the neighborly interactions that defined pre-industrial society. Except that now our neighbor is anyone with a Facebook account,” Jason Tanz wrote last year on Wired.
It also seems that without trust the sharing economy wouldn’t be growing so fast. A PwC report explains that “convenience and cost-savings are beacons, but what ultimately keeps this economy spinning—and growing—is trust. It’s the elixir that enables us to feel reassured about staying in a stranger’s home or hitching a ride from someone we’ve never met.”...MOREApparently the key, whether for realz or for gaming, is pictures.
From the Social Science ResearchNetwork:
Trust and Reputation in the Sharing Economy: The Role of Personal Photos on Airbnb
August 10, 2015
Studies of e-commerce have focused on the role of online reviews in revealing the true quality of goods and building trust. The recently flourishing sharing-economy platforms, such as Airbnb, highlight sellers’ appearance by posting their personal photos. We suggest that the presence of these photos can have a significant impact on consumer behavior. Specifically, we contend that consumers infer the seller’s trustworthiness from these photos, which consequentially affects their choice. In an empirical analysis of Airbnb’s data and two controlled experiments, we found that the more trustworthy the seller is perceived to be from her photo, the higher is her listing’s price and its probability to be booked. Unlike previous findings in e-commerce studies, we find that sellers’ reputation, communicated by their online review scores, has no effect on consumers. This null effect is shown to stem from the uniformly high review scores in Airbnb. We show further that if review scores were varied experimentally, then they would affect consumers’ decisions but still the role of the seller’s photo remains prominent. These findings imply that in sharing-economy markets sellers are distinguished by consumer’s perception of their photos more than by their review scores. (46 page PDF)