Kellogg Magazine  |  Spring/Summer 2015



Are you 
Uber-ready?Are you

Kent Grayson
explains how peer companies
rely on your trust to succeed

At the heart of the sharing economy, an industry that generates more than $15 billion globally, according to PwC,  is trust.

Participants on both sides of a transaction involving peer-to-peer companies like Uber and Airbnb must trust their peers to act in good faith — with a little benevolence tossed in for good measure, says Kent Grayson, an associate professor of marketing at Kellogg who holds the Bernice and Leonard Lavin Professorship. Grayson’s research has focused on the importance of trust in the marketplace.

In fact, Grayson says, the peer-to-peer model works only when end users trust they will receive the expected level of service. “As a product category, Uber is a taxi service, but it’s kind of a new thing. You have to trust the concept as well as the driver and this service,” he says.

In any transaction, customers must have some level of trust in the product, service, brand or sales representative before they will complete the sale. When consumers look for a mortgage, they desire trust in a mortgage broker, trust in the bank branch they’re working with, trust in the regulators who oversee the mortgage industry, trust in the politicians who appoint the regulators and trust in the institution of banking, he says.

Uber is a taxi service, but it’s kind of a new thing. You have to trust the concept as well as the driver and this service.

Kent Grayson
Associate Professor of Marketing, Bernice and Leonard Lavin Professorship

In peer-to-peer companies, the trust often comes down to the individual who is doubling as an Uber driver, a Meal Sharing chef or an Airbnb innkeeper and how well they deliver on the offer presented. The homeowner who goes above and beyond to ensure a guest enjoys the accommodations builds trust in Airbnb as well as in the concept of peer-to-peer companies and the overall sharing economy.

At the same time, the marketplace companies facilitating the peer-to-peer transactions can foster trust through procedures and protocol designed to avert problems.

Airbnb, which connects travelers with members’ homes, has received complaints from travelers who report the accommodations weren’t as described. To prevent unwanted surprises, the company encourages travelers to read reviews about hosts and look for verified information, such as references, a spokeswoman said.

But in certain cities, Airbnb also will assign a professional photographer to take photos of hosts’ locations at no charge. Then it includes a watermark on the listing to denote the photos have been verified. The company also offers Verified ID, which connects a host’s or end user’s profile with additional sources of information including a social account, a photo of the person’s government-issued ID and their contact information. 

To be fair, the value proposition of peer-to-peer companies often lies with their scale. They have come up with a means for connecting the peer-to-peer buyer and seller, and part of their appeal is in their hominess.

The result is a range of competence. “You have a lot of people trying to make it big,” Grayson says. While peer-to-peer companies often screen applicants through background checks, others think, “the best way to screen people is to get them out there and see how well they do,” he adds. As people try it, many decide taxi driving, meal planning or innkeeping for a crowd just isn’t for them.