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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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    6. Christopher Gerling & Stefan Lessmann, 2024. "Leveraging AI and NLP for Bank Marketing: A Systematic Review and Gap Analysis," Papers 2411.14463, arXiv.org.
    7. Ru Jia & Shanshan Wang, 2021. "Investigating the Impact of Professional and Nonprofessional Hosts’ Pricing Behaviors on Accommodation-Sharing Market Outcome," Sustainability, MDPI, vol. 13(21), pages 1-16, November.
    8. Tien Foo Sing & Yiheng Zou, 2024. "Improving search efficiency in housing markets using online listings," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 52(4), pages 1020-1044, July.
    9. 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.
    10. En-Gir Kim & Se-Hak Chun, 2019. "Analyzing Online Car Reviews Using Text Mining," Sustainability, MDPI, vol. 11(6), pages 1-22, March.
    11. 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.
    12. Fan, Huirong & Khouja, Moutaz & Gao, Jie & Zhou, Jing, 2023. "Incorporating social learning into the optimal return and pricing decisions of online retailers," Omega, Elsevier, vol. 118(C).
    13. Lily Shen & Sean Wilkoff, 2022. "Cleanliness is next to income: The impact of COVID‐19 on short‐term rentals," Journal of Regional Science, Wiley Blackwell, vol. 62(3), pages 799-829, June.
    14. 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, vol. 13(1), pages 1-15, December.
    15. Lin, Wenzhen & Yang, Fan, 2024. "The price of short-term housing: A study of Airbnb on 26 regions in the United States," Journal of Housing Economics, Elsevier, vol. 65(C).
    16. Yifei Jiang & Honglei Zhang & Xianting Cao & Ge Wei & Yang Yang, 2023. "How to better incorporate geographic variation in Airbnb price modeling?," Tourism Economics, , vol. 29(5), pages 1181-1203, August.
    17. Jiawei Chen & Yinghui (Catherine) Yang & Hongyan Liu, 2021. "Mining Bilateral Reviews for Online Transaction Prediction: A Relational Topic Modeling Approach," Information Systems Research, INFORMS, vol. 32(2), pages 541-560, June.
    18. Almorox, Eduardo Gonzalo & Stokes, Jonathan & Morciano, Marcello, 2022. "Has COVID-19 changed carer's views of health and care integration in care homes? A sentiment difference-in-difference analysis of on-line service reviews," Health Policy, Elsevier, vol. 126(11), pages 1117-1123.
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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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