Introduction to the relevance of Trust in the sharing economy. Part of a cycle of presentations on the subject.

1. in the sharing economy
shareNL | Jessica Slijpen | November 2014
Part I - Introduction
Image courtesy of Tonis Pa

2. There is a lot to say about trust…
Therefor we create several presentations
Part I – Introduction
Part II – The trust triangle
Part III – Trust management in peer-to-peer platforms
Part IV – Cross-platform trust tools
Part V – Further thoughts
These – and possibly others – will be subsequently posted on
SlideShare.
Enjoy the read and don’t hesitate to contact us if you have
questions or other interest in the subject.

3. Drivers for sharing
“TRUST is the new currency of the sharing economy”
- Rachel Botsman
Access over ownership
you don’t need a drill, you need a hole in the wall
Idling capacity
a car sits idle 90% of the time
Technology
web 3.0 / apps
Scale
mobile, social, expanding, urbanized population
Changing societal values
a.o. reduced trust in large institutions, re-evaluation of ‘the community’,
environmental consciousness

4. Trust in the sharing economy
is about
trust between strangers

5. Beliefs
People are generally trustworthy
People enjoy sharing, giving, cooperating
People have an innate tendency to do the right thing

6. 110.000.000 active users
worth of goods traded in 2013
$ 212.000.000.000 i.e. $ 6.722 per second
• negative rating of sellers: 1%
• negative rating of buyers: 2%
• users with a strong track record receive 8% higher price on goods sold
Take a look

7. • 550.000 listings in 2014
• 15 million nights booked
• 90% of ratings are 4.5 or 5
(out of 5)
Take a look

8. • 8 million members
• 2 million rides offered at any time
• average rating 4,8 (out of 5)
Take a look

9. & many more…

10. Take a look
• 400% growth over last 12 month
• 8.000 cars registered since 2011
• number of incidents:
1:500 rentals = 0,002%
• most common incidents: (parking) damage, car returned
in dirty state, car returned without refueling
• the social responsibility results in much better care taking
than in conventional car rental
• renters even clean outperform the requirements, such as
cleaning the car unrequested
• the reputation systems provide the platform with data to
filter out the ‘rotten apples’

11. Take a look
• started in 2012
• 66.000 users
• 8.600 cooks
• 145.000 meals shared
• 8 minor incidents = 0,006%
• no quantitative ratings only qualitative reviews
• reviews essential, especially to trigger first-users

12. & many more…

13. This was never predicted
by economists
but it is happening

14. Before the industrial revolution:
Living in relatively small communities where you were
dependent of each other. Swapping, trading, lending was
part of everyday life. Reputation was important
From industrial revolution onwards:
The rise of large organizations and institutions in whom
we trust. Focus on private ownership.
Since economic crisis 2008:
Big decline in trust in large organizations and institutions.
Rise of sharing economy and trust in strangers.
Some history…

15. Media coverage of the sharing economy tends to be
lyrical focusing on the power to the people
or
skeptical focusing on extreme incidents
According to the numbers, the overwhelming majority
of transactions is successful
Skewed media coverage

16. But sometimes things go wrong
Due to
• Fraud, crime
• Carelessness
• Unintentional

17. Trust, but verify
Approach of most sharing platforms

18. Characteristics of trusting approach
• Largely self-managed, peer-policed systems
• Disagreements are usually resolved among the
community
• Platform acts as curator & ambassador: facilitates the
match between ‘request and offer’ (and vice versa)
• No top-down ‘command and control’
From: What’s Mine is Yours, Botmans & Rogers (2010)

19. The result of trusting approach
• Free riders, vandals, abusers are weeded out
• Openness, trust and reciprocity are rewarded
• socially during the transaction
• digitally in the reputation score

20. About TRUST

21. Trust is multidimensional
• Trust is personal
• propensity to trust
• willingness to take risk
• Trust is context specific (situational)
• you may trust a person to take care of your dog but not to drive your car
• Trust is cultural
• Affective trust  cognitive trust

22. Trust is a complex construct
• Online trust & offline trust differ, but we don’t know exactly how
• Trust is about risk mitigation
• Difference between actual and perceived
trustworthiness – do we know (and agree with) our own biases?
• Low trust => high transaction costs

23. Wired – May 2014
Jason Tanz:
[red:] These platforms provide
“a set of digital tools that
enable and encourage us
to trust our fellow human
beings.”

24. Reputation is key to trust
Both platforms and
users go a long
way to build and
protect their
reputation

25. Reputation trail
In this society, increasingly, being generous – i.e.
sharing stuff, skills and content – will be rewarded with
a positive reputation and recommendation, leading to
access.
Reputations are long lasting as you build an online
reputation trail
Already now, platforms and users go a long way to
build and protect their reputation

26. Reputation management a must?
There are successful platforms with very thin trust management
Check out Craigslist: platform supporting (local) community moderated
classifieds and forums.
The only trust tool in Craigslist is user advice on how to avoid scams.
Perhaps we are inclined to over-manage trust???

27. Reputation a must?
There are successful platforms with very thin trust management
Check out Peerby: lending stuff from neighbors
The only trust tools in Peerby:
name (synonym allowed) & chat functionality
Perhaps sufficient due to characteristics of:
transaction: goods with relatively low risk
users: early adopters, neighbors
marketplace: early company phase
Perhaps we are inclined to over-manage trust?
We don’t know (yet)…

28. Shared with passion ;)
Jessica Slijpen
jessica@sharenl.nl
credits illustrations:
Kathryn Hing