Reputation Cues as Signals in the Sharing Economy

Reputation cues, like star ratings, signal qualities of service providers in the sharing economy and may affect user behavior. Guided by concepts from signaling theory and using a repeated measures experiment (N = 221), this study manipulated the level of star ratings of ride sharing drivers. Intuitive findings are perceived service quality and willingness to use the service provider are higher when the star rating is high versus low. Extending prior work, perceived service quality mediates the effect of reputation on willingness, explaining 83% of the total effect. Also, the direct effect of reputation cues on perceived service quality depends, albeit weakly (η 2 p = 0.02), on how much users say they pay attention to them. These novel findings clarify the kinds of mental processing that occur when users of shared services evaluate reputation cues. We discuss findings in terms of costly signaling and consider practical implications for users and providers.