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It's almost as if AirBnB's hosts and guests are bearing the externalities that should be priced into the transaction on both sides... For hosts, property damag

It's almost as if AirBnB's hosts and guests are bearing the externalities that should be priced into the transaction on both sides... For hosts, property damage, etc. is a matter of when, not if, and for those things you get insurance. But as far as I know that's not a standard thing for hosts. Pricing in hidden hosting costs would make hosting look less profitable up front, then AirBnB's market would shrink. For guests, inconvenient cancellations, bad hosts, bad rentals, etc. AirBnB doesn't give you any real recourse like paying for you to stay elsewhere the way a hotel often does. That would be expensive and you'd have to either pass the cost onto the customers (raise fees/prices), or reduce your margins. That's not counting societal externalities like permanent AirBnB setups in neighborhoods that are affecting community cohesion. These days, I use AirBnB to save money by taking on some level of discomfort/risk. If I'm looking for a worry-free night with decent amenities where I want to minimize mental overhead, I just book a hotel.

gnicholas 8y ago
I wonder if the Airbnb team has ever thought about their profit and its relationship to the externalities you describe. As a customer, I've felt like I pay for something and then bear lots of risk if it goes wrong, but the discount often isn't sufficient to cover that risk. At the end of the day, it may still be a good thing for the temporary housing marketplace if people who want certainty (in general or just for the trip) stay in a hotel, and people who are willing to trade certainty for some savings stay in Airbnbs. This would lower demand for hotels, and therefore cost. But this is only an efficient outcome if Airbnb guests understand how the company will leave them high and dry if something goes wrong.
- michaelchisari 8y ago
  I wonder if the Airbnb team has ever thought about their profit and its relationship to the externalities you describe I'm convinced the majority of "unicorns" ignore (or actively dodge) externalities in favor of lucrative profits.
  - gnicholas 8y ago
    I know successful companies (and the VCs that back them) look for large market inefficiencies, which create profit opportunity. I wonder if anyone has ever broken down their profit opportunity in terms of: (1) we're taking advantage of this existing inefficiency and (2) we're creating these externalities that we don't bear the cost of. Some investors would not be dissuaded by (2), if they are purely looking for financial returns. In fact, if you could make a compelling argument that you're externalizing some of your costs, it could be attractive to financial investors because it would help prove that your business model can be profitable.
  - munchbunny 8y ago
    I'm convinced the majority of "unicorns" ignore (or actively dodge) externalities in favor of lucrative profits. I think most companies develop convenient ethical blind spots where profit motive conflicts with the ethical problem from generating externalities. AirBnB takes a strong moral stand on "inclusion" as a principle but has a clear blind spot when it comes to consumer, property, and residential externalities. Facebook takes a strong moral stand on free speech, but it has a clear blind spot for privacy and public discourse. Other companies don't necessarily take moral stands, but they still develop convenient blind spots. Youtube (Google) and ideological polarization in its recommendations, Equifax and its lack of cybersecurity measures, and so on.
    - drewbug 8y ago
      > Facebook takes a strong moral stand on free speech It does?
      - FactolSarin 8y ago
        Of course! You're free to post anything they approve of.
    - traek 8y ago
      > Facebook takes a strong moral stand on free speech, but it has a clear blind spot for privacy and public discourse. I think Facebook expressly does not take a stand for free speech, they've been pretty clear about banning offensive/hateful/sexual content from their platform (to the point of being prudish, e.g. with female nipples).
philip1209 8y ago
As a short-term tenant who isn't eligible for property insurance, there is no way for me insure against losses. I spent considerable time trying to get a policy after our burglary, and it wasn't possible. In my opinion, providing this insurance should be handled by the marketplace. The problem is that Airbnb stays are similar to airline flight delays - the cost of a problem can result in many times more costs than just the cost of the flight. The EU has very strict laws - if you booked a flight in good faith, then the airline is responsible for getting you to your destination, paying for your needs (food/housing) until that happens, and pay cash compensation of up to 600 euros. In my opinion, the government should provide the same type of legislation for short-term stays. If you make a booking, the platform should at least be responsible for housing you for the duration of your stay.
- alexhutcheson 8y ago
  Depending on your policy, your homeowners insurance or renters insurance (at your long-term home) may cover you for theft from hotels, Airbnbs, etc. If yours doesn't, you could shop around for one that does.
  - philip1209 8y ago
    As a digital nomad, I have no long-term home. I literally live in Airbnbs. I tried finding a policy to cover me, but none exists. Policies also vary a lot with burglaries - eg some require signs of forced entry.
    - gambiting 8y ago
      Hmmm I wonder if in that case a good travel insurance would work. You are staying in those places temporarily so I'd argue it's travel.
    - debatem1 8y ago
      Have you considered starting this up as a business? Surely there's a market for it, and the claims data alone would make you a valuable acquisition target.
MatekCopatek 8y ago
I feel like what you described is the main reason for the profitability of most "sharing economy" services. Uber is also advertised as a little side gig you can do when your car is not being used while the real goal is to have a taxi service that isn't subject to the same legislation and unloads more cost on the driver.
- jufemaiz 8y ago
  When the parasite consumes the host.
- crooked-v 8y ago
  I think Uber is a weird edge case in this comparison because of how fundamentally awful traditional taxi services are in many places.
  - brokenmachine 8y ago
    Maybe slightly off topic but I don't get what the point of Uber driver reviews/star ratings are. The passenger can't pick what driver they get, so who are those reviews helping? I have a worrying suspicion that it's only so Uber can put pressure on drivers in some way.
    - tinco 8y ago
      If there are multiple drivers within your radius, Uber applies an algorithm to decide which driver gets you as a passenger. Their rating affects this, so if they have a had rating they'll have less passengers in high traffic areas.
    - woolvalley 8y ago
      Drivers get removed from the service after their rating drops bellow a threshold, so yes, it matters a lot. Drivers also tend to prefer high starred riders and might reject low star riders.
      - 8y ago
mschuster91 8y ago
> It's almost as if AirBnB's hosts and guests are bearing the externalities that should be priced into the transaction on both sides... Often enough, the neighbors also bear externalities: noise from guests dragging their heavy roller coffers up and down the stairs and smashing all doorbell buttons in the hope someone opens the door as they locked themselves out, rents rising because it's far more profitable to rent 100€/night/AirBnB than 1000€/month on the open market, ...
dragonwriter 8y ago
> It's almost as if AirBnB's hosts and guests are bearing the externalities If the parties to the transaction are bearing the cost, it's not an externality. It may be a hidden cost, but it's only an externality if it is born by someone outside the voluntary participants in the transaction.
fouc 8y ago
Problem is that hotel is often cheaper than an AirBnB's final price.
notananthem 8y ago
Considering it was born out of the couch surfing movement you hit the nail on the head. All the worst potential things shared by hosts and guests with a cool risk free cut going to airbnb

gnicholas 8y ago

I wonder if the Airbnb team has ever thought about their profit and its relationship to the externalities you describe. As a customer, I've felt like I pay for something and then bear lots of risk if it goes wrong, but the discount often isn't sufficient to cover that risk. At the end of the day, it may still be a good thing for the temporary housing marketplace if people who want certainty (in general or just for the trip) stay in a hotel, and people who are willing to trade certainty for some savings stay in Airbnbs. This would lower demand for hotels, and therefore cost. But this is only an efficient outcome if Airbnb guests understand how the company will leave them high and dry if something goes wrong.

michaelchisari 8y ago
I wonder if the Airbnb team has ever thought about their profit and its relationship to the externalities you describe I'm convinced the majority of "unicorns" ignore (or actively dodge) externalities in favor of lucrative profits.
- gnicholas 8y ago
  I know successful companies (and the VCs that back them) look for large market inefficiencies, which create profit opportunity. I wonder if anyone has ever broken down their profit opportunity in terms of: (1) we're taking advantage of this existing inefficiency and (2) we're creating these externalities that we don't bear the cost of. Some investors would not be dissuaded by (2), if they are purely looking for financial returns. In fact, if you could make a compelling argument that you're externalizing some of your costs, it could be attractive to financial investors because it would help prove that your business model can be profitable.
- munchbunny 8y ago
  I'm convinced the majority of "unicorns" ignore (or actively dodge) externalities in favor of lucrative profits. I think most companies develop convenient ethical blind spots where profit motive conflicts with the ethical problem from generating externalities. AirBnB takes a strong moral stand on "inclusion" as a principle but has a clear blind spot when it comes to consumer, property, and residential externalities. Facebook takes a strong moral stand on free speech, but it has a clear blind spot for privacy and public discourse. Other companies don't necessarily take moral stands, but they still develop convenient blind spots. Youtube (Google) and ideological polarization in its recommendations, Equifax and its lack of cybersecurity measures, and so on.
  - drewbug 8y ago
    > Facebook takes a strong moral stand on free speech It does?
    - FactolSarin 8y ago
      Of course! You're free to post anything they approve of.
  - traek 8y ago
    > Facebook takes a strong moral stand on free speech, but it has a clear blind spot for privacy and public discourse. I think Facebook expressly does not take a stand for free speech, they've been pretty clear about banning offensive/hateful/sexual content from their platform (to the point of being prudish, e.g. with female nipples).

philip1209 8y ago

As a short-term tenant who isn't eligible for property insurance, there is no way for me insure against losses. I spent considerable time trying to get a policy after our burglary, and it wasn't possible. In my opinion, providing this insurance should be handled by the marketplace. The problem is that Airbnb stays are similar to airline flight delays - the cost of a problem can result in many times more costs than just the cost of the flight. The EU has very strict laws - if you booked a flight in good faith, then the airline is responsible for getting you to your destination, paying for your needs (food/housing) until that happens, and pay cash compensation of up to 600 euros. In my opinion, the government should provide the same type of legislation for short-term stays. If you make a booking, the platform should at least be responsible for housing you for the duration of your stay.

alexhutcheson 8y ago
Depending on your policy, your homeowners insurance or renters insurance (at your long-term home) may cover you for theft from hotels, Airbnbs, etc. If yours doesn't, you could shop around for one that does.
- philip1209 8y ago
  As a digital nomad, I have no long-term home. I literally live in Airbnbs. I tried finding a policy to cover me, but none exists. Policies also vary a lot with burglaries - eg some require signs of forced entry.
  - gambiting 8y ago
    Hmmm I wonder if in that case a good travel insurance would work. You are staying in those places temporarily so I'd argue it's travel.
  - debatem1 8y ago
    Have you considered starting this up as a business? Surely there's a market for it, and the claims data alone would make you a valuable acquisition target.

MatekCopatek 8y ago

I feel like what you described is the main reason for the profitability of most "sharing economy" services. Uber is also advertised as a little side gig you can do when your car is not being used while the real goal is to have a taxi service that isn't subject to the same legislation and unloads more cost on the driver.

jufemaiz 8y ago
When the parasite consumes the host.
crooked-v 8y ago
I think Uber is a weird edge case in this comparison because of how fundamentally awful traditional taxi services are in many places.
- brokenmachine 8y ago
  Maybe slightly off topic but I don't get what the point of Uber driver reviews/star ratings are. The passenger can't pick what driver they get, so who are those reviews helping? I have a worrying suspicion that it's only so Uber can put pressure on drivers in some way.
  - tinco 8y ago
    If there are multiple drivers within your radius, Uber applies an algorithm to decide which driver gets you as a passenger. Their rating affects this, so if they have a had rating they'll have less passengers in high traffic areas.
  - woolvalley 8y ago
    Drivers get removed from the service after their rating drops bellow a threshold, so yes, it matters a lot. Drivers also tend to prefer high starred riders and might reject low star riders.
    - 8y ago

mschuster91 8y ago

> It's almost as if AirBnB's hosts and guests are bearing the externalities that should be priced into the transaction on both sides... Often enough, the neighbors also bear externalities: noise from guests dragging their heavy roller coffers up and down the stairs and smashing all doorbell buttons in the hope someone opens the door as they locked themselves out, rents rising because it's far more profitable to rent 100€/night/AirBnB than 1000€/month on the open market, ...

dragonwriter 8y ago

> It's almost as if AirBnB's hosts and guests are bearing the externalities If the parties to the transaction are bearing the cost, it's not an externality. It may be a hidden cost, but it's only an externality if it is born by someone outside the voluntary participants in the transaction.

fouc 8y ago

Problem is that hotel is often cheaper than an AirBnB's final price.

notananthem 8y ago

Considering it was born out of the couch surfing movement you hit the nail on the head. All the worst potential things shared by hosts and guests with a cool risk free cut going to airbnb