Consumer Search and Seller Reliability on Airbnb

We study the consequences for sellers from being perceived as unreliable. We use a theoretical model to generate predictions about how information about reliability impacts sellers, and show that the e↵ect depends on the search process that consumers endogenously follow: purchasing after finding information that qualifies a product, versus purchasing after not finding information that disqualifies a product. We then test our predictions against data from Airbnb listings in Manhattan. We find evidence suggesting that consumers tend to use the former approach, and demonstrate significant costs sellers may incur from negative information about their reliability.