Benjamin Edelman et al., SSSN, December 9, 2015
Online marketplaces increasingly choose to reduce the anonymity of buyers and sellers in order to facilitate trust. We demonstrate that this common market design choice results in an important unintended consequence: racial discrimination. In a field experiment on Airbnb, we find that requests from guests with distinctively African-American names are roughly 16% less likely to be accepted than identical guests with distinctively White names. The difference persists whether the host is African American or White, male or female. The difference also persists whether the host shares the property with the guest or not, and whether the property is cheap or expensive. Discrimination is costly for hosts who indulge in it: hosts who reject African-American guests are able to find a replacement guest only 35% of the time. On the whole, our analysis suggests a need for caution: while information can facilitate transactions, it also facilitates discrimination.