Data, Reputation and the Sharing Economy

Dateline: November 6, 2015

Welcome to our Friday WRAP – one thought-provoking idea to think about over the weekend.

In the sharing economy, reputation is critical to success. According to Boston College Professor Sam Ransbotham, who recently published a blog titled Data at the Heart of the Sharing Economy at Sloan Management Review, trust and reputation are the secret sauce of the sharing economy.  And at the source of an online reputation is the data collected over all your interactions. He writes,

Without data, sharing would be a single-stage game. Each player would maximize only his or her value in each transaction. When renting out your house, why not exaggerate the view or amenities if it got you a higher price? When giving someone a ride, who cares if the seats are muddy? When renting someone else’s house, why bother taking care of anything? When riding in someone else’s car, why not smoke if you want to? As each player myopically maximizes his or her own value, the other player may bear the brunt of the consequences. Sharing, then, falls apart quickly.

Data, however, turns a single-stage game into a repeated, multi-stage game. When games transition from single-stage to repeated, suddenly players have consequences for how they play each round. The exaggerated view and amenities get reported for future prospective renters to see. The trashed house goes down on a nefarious renter’s permanent record.

What is your organization’s reputation?  What can you do to enhance it?

That’s a WRAP!  Have a great weekend!

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