Questions & Answers
What Is the Role of Trust in Peer-to-Peer Marketplaces?
Arun Sundararajan, professor of Information, Operations, and Management Sciences at New York University Leonard N. Stern School of Business, explains the digital infrastructures that began 20 years ago have enabled trust in peer-to-peer markets..
Transcript
What is the role of trust in peer-to-peer marketplaces?
I think the role of trust is central in mediating peer-to-peer marketplaces. I think the reason why we have seen this recent explosion in the sharing economy has to do with a lot of digital trust infrastructures coming of age. Twenty years ago, when eBay started, they laid the foundations for digital trust by inventing the online feedback systems that allowed us to learn from the experiences of others. And that seemed to provide enough trust when we were sending packages containing goods to other people. But what's emerged more recently are a wide variety of other signals of "I am a good person," "I am a real person," "I can be relied on," including systems that allow you to prove that you have a particular form of government ID. Connections to your Facebook or LinkedIn network, which provide proof of real-world social capital. Even things as innocuous as having a mobile phone, which sort of provides evidence that you have gone through some sort of screening process conducted by someone else.
There are certain contexts in which people want to transact with other people like them or who share the same value system as them, [such as] auto club memberships [or] "I belong to the rotary club." These are central to the high-touch, high-stakes kinds of interactions that we're seeing in peer-to-peer marketplaces now, like getting into a stranger's car and saying, "Drive me to another city."