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Reviews and price on online platforms: Evidence from sentiment analysis of Airbnb reviews in Boston

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  • Lawani, Abdelaziz
  • Reed, Michael R.
  • Mark, Tyler
  • Zheng, Yuqing

Abstract

There is a growing interest in deriving value from user-generated comments and reviews online. For businesses and consumers using online platforms, the reviews serve as quality metrics and influence consumers purchasing decision. This study examines the relationship between guests' reviews, used as a proxy for quality, and the price set by hosts on the Airbnb platform in Boston. Using sentiment analysis to derive the quality from the reviews and a hedonic spatial autoregressive model applied to rental room prices on Airbnb, we find that prices are strategic complements and are influenced by the review score, the characteristics of the room, and the features of the neighborhood. The marketing implication is that consumers respond to the contents of online reviews, in addition to customer ratings. Policies that improve the quality of the room for one host will have a spillover effect on the price of rooms offered by other hosts.

Suggested Citation

  • Lawani, Abdelaziz & Reed, Michael R. & Mark, Tyler & Zheng, Yuqing, 2019. "Reviews and price on online platforms: Evidence from sentiment analysis of Airbnb reviews in Boston," Regional Science and Urban Economics, Elsevier, vol. 75(C), pages 22-34.
  • Handle: RePEc:eee:regeco:v:75:y:2019:i:c:p:22-34
    DOI: 10.1016/j.regsciurbeco.2018.11.003
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    Cited by:

    1. Robert J. Hill & Norbert Pfeifer & Miriam Steurer, 2020. "The Airbnb Rent-Premium and the Crowding-Out of Long-Term Rentals," Graz Economics Papers 2020-06, University of Graz, Department of Economics.
    2. José António C. Santos & Manuel Á. Fernández-Gámez & Miguel Ángel Solano-Sánchez & Francisco José Rey-Carmona & Lorena Caridad y López del Rio, 2020. "Valuation Models for Holiday Rentals’ Daily Rates: Price Composition Based on Booking.com," Sustainability, MDPI, Open Access Journal, vol. 13(1), pages 1-1, December.
    3. En-Gir Kim & Se-Hak Chun, 2019. "Analyzing Online Car Reviews Using Text Mining," Sustainability, MDPI, Open Access Journal, vol. 11(6), pages 1-22, March.
    4. Lily Shen & Stephen L. Ross, 2019. "Information Value of Property Description: A Machine Learning Approach," Working papers 2019-20, University of Connecticut, Department of Economics, revised Sep 2020.

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    More about this item

    Keywords

    Airbnb; Price competition; Reviews; Sentiment analysis; Spatial hedonic price;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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