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Trust and Disintermediation: Evidence from an Online Freelance Marketplace

Author

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  • Grace Gu

    (Boston College, Chestnut Hill, Massachusetts 02467)

  • Feng Zhu

    (Harvard University, Boston, Massachusetts 02163)

Abstract

As a platform improves trust between the two sides of its market to facilitate matching and transactions, it faces an increased risk of disintermediation: with sufficient trust, the two sides may circumvent the platform to avoid the platform’s fees. In this paper, we investigate the relationship between increased trust and disintermediation by leveraging a randomized control trial in an online freelance marketplace. We find that enhanced trust increases the likelihood of high-quality freelancers being hired. However, when the trust level is sufficiently high, it also increases disintermediation, which offsets the revenue gains from the increase in hiring high-quality freelancers. We also identify heterogeneity across clients and freelancers in their tendencies to disintermediate. We discuss strategies that platforms can use to mitigate the tension between trust building and disintermediation. This paper was accepted by Chris Forman, information systems.

Suggested Citation

  • Grace Gu & Feng Zhu, 2021. "Trust and Disintermediation: Evidence from an Online Freelance Marketplace," Management Science, INFORMS, vol. 67(2), pages 794-807, February.
    • Handle: RePEc:inm:ormnsc:v:67:y:2021:i:2:p:794-807
    DOI: 10.1287/mnsc.2020.3583
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    References listed on IDEAS

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