Building Trust in P2P Marketplaces

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• Thesis: Building trust in P2P marketplaces: an empirical analysis of trust systems for the sharing economy. Francesca Pick.

URL = http://francesca-sp.tumblr.com/ full version

Context

Francesca Pick:

“As the sharing economy continues to gain momentum, the importance of security and trust between users is becoming increasingly apparent. Not only the Airbnb incident in June 2011 or the shutdown of the luxury carsharing company HiGear have shown that peer-to-peer (P2P) marketplaces involve higher risks than business-to-consumer e-commerce. The key advocates of the sharing economy Rachel Botsman and Lisa Gansky have also identified “trust between strangers” as a necessary foundation for the functioning of P2P asset-sharing marketplaces. While the existing reputation systems such as eBay’s rating system may have been sufficient for e-commerce, the newer P2P platforms, such as car or flat sharing, require more complex trust systems. Since acting anonymously is far easier on the Web than in real life, P2P transactions also call for some type of identity verification, that confirms that you are who you say you are. Having recognized these issues, several entrepreneurs in different countries have begun to build portable cross-platform trust and identity systems meant to facilitate the sharing of assets between individuals, such as TrustCloud, Briiefly, Legit and Peertrust.

In my bachelor thesis I took a closer look at these trust systems and examined the trust issue in P2P marketplaces in general. By interviewing eleven interesting individuals from across the globe involved in the collaborative consumption movement I gained many interesting insights.”

Abstract

“Collaborative consumption is a new term that refers to the sharing of products and services between individuals and businesses through online marketplaces. As identified by the sharing economy advocates Rachel Botsman and Lisa Gansky, peer-to-peer (P2P) marketplaces in particular rely on a foundation of trust between users, since they involve higher risks than business-to-consumer e-commerce. For instance giving a stranger your house key or sharing a ride with a stranger is more risky than renting a car from a carsharing company such as Zipcar. Thus there is a need for systems that reduce the risk of using P2P platforms and measure users’ trustworthiness online. Drawing from theories of trust from various disciplines and eleven qualitative interviews with different stakeholders of the collaborative consumption movement, this thesis investigates how to build trust between strangers in P2P marketplaces. The stakeholders that were interviewed included researchers and social innovators, P2P platforms and companies attempting to create universal, cross-platform trust systems for the sharing economy.

The results indicate that measuring trustworthiness with an online trust system is a challenging endeavor, since trust is a multidimensional, subjective, situational and culturally dependent construct. The findings also suggest that companies attempting to create a trust system for P2P marketplaces must find the right balance between accurate trust measurement and practicality of the system for users. Transparency and careful handling of user data were also found to be an important condition for gaining the trust of P2P platforms and individuals seeking to use the trust system. Building online communities of people with similar values and tastes is also proposed as an effective way of building trust. Suggestions for the practical implementation of online trust systems and future research are discussed.” (http://francesca-sp.tumblr.com/)


Summary of Research Findings

Francesca Pick:

“Here are some takeaways from my research:


Trust is complex

When I first started working on trust, one of the things I discovered was that trust is difficult to define. If you ask different people to describe trust, you will probably hear a variety of keywords: honesty, credibility, reliability, empathy, belief or faith. None of these is wrong or right, they are merely different dimensions of trust. There are many emotional and cognitive factors that influence our decisions to trust or not. These are however very personal, since every person perceives trustworthiness differently. A person may make a trustworthy impression on one person, but not on another. Trust also varies by situation: you may trust a friend to return your borrowed vacuum cleaner in good condition, but not your car. All these characteristics of trust make it challenging to find a universal solution to building trust in P2P marketplaces.


Transparency is key

On the Web, vast amounts of data are created every day. Most of the companies I examined in my thesis are looking for ways to make this data available and useful to users, for instance by calculating so-called “trust scores” with the help of algorithms. These scores, which are based on data from social networks and other sources (that provide things like damage reports, peer reviews and transaction history) are supposed to help strangers judge each other’s trustworthiness. This information facilitates and accelerates the process of building trust between strangers on the Web. Since you take your trust score with you whatever platform you are on, it encourages good behavior. A person who has worked hard to build up an online reputation will not want to jeopardize that.

My research also showed that it is crucial for companies offering these systems to remain as transparent as possible about how their trust scores are derived. Since trust is complex and every platform requires different dimensions of trust, every person should be able to understand the score and decide themselves whether they want to trust a person or not. Being a good driver is very different, for example, from being a friendly and reliable CouchSurfing host.

Another issue with creating trust and identity systems in general is data privacy. The functioning of these trust systems heavily depends on the users’ willingness to give a third party their data in return for building their online reputation, and not everyone is willing to do that. Especially in countries outside the U.S. people seem to be reluctant to reveal their personal data to third parties. It’s thus crucial for companies working on trust systems to gain the trust of users and P2P platforms. As Simon Baumann, PR Spokesperson at the German ride-sharing company Carpooling.com noted, “the question is always, how trustworthy the trust system is.”


Communities are a great way to build trust

A sense of community also plays an important role in building trust and, according to some research, may even lead to more moral and selfless behavior. As my research showed, many existing P2P marketplaces solve the trust issue by fostering trusting communities that self-regulate themselves. At Carpooling.com, for instance, letting the user community monitor itself has worked excellently for ten years. Like a small village in which trust exists because everybody knows each other directly or indirectly, online communities have the potential to function as a trust system for the sharing economy. For this to work you need to connect people who have similar interests, tastes and values. Research has shown that people who are similar and can identify with one another are more likely to trust each other. This is the case at Carpooling.com, where the majority of the users have in common that they are current or former students. Airbnb has also recognized the importance of shared interests and now lets users upload short self-made videos about themselves and has created groups in which users can connect based on their interests.

People share for different reasons

One of the most interesting insights from my research was that people with different values and interests also have different motivations for sharing. While some people use P2P platforms for financial reasons, others have ideological or social motivations, such as sharing experiences or contributing to a sustainable future. This discrepancy in users’ motivations could make it more difficult to build trust on P2P platforms.

Trust varies across cultures

A further challenge of building trust in P2P marketplaces is cultural differences. As Natalie Ortiz, a Costa Rican service designer working at Deways in Paris, explained, introducing collaborative consumption in Costa Rica would be almost impossible. Since there is a strong sense of community there, according to her, connecting through the Internet would feel unnatural. “If you need something, you just knock on the neighbor’s door.” Bauman from Carpooling.com also noted that it is okay to sell ride-sharing as a type of hitchhiking in Spain, whereas in the U.K. it is better to refer to a new form of mobility. In Greece the concept is completely unknown, which means that companies have to start from zero in building trust and familiarizing people with the concept of ride-sharing.

Altogether my analysis brought me to the conclusion that an online trust system is indispensible for the sharing economy to work. The challenge however remains how to best design such a trust system taking into account issues such as transparency and data privacy.” (http://www.shareable.net/blog/how-trust-is-built-in-peer-to-peer-marketplaces)