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18 Minn. J.L. Sci. & Tech. 673 (2017)
Feedback Loop Failure: Implications for the Self-Regulation of the Sharing Economy

handle is hein.journals/mipr18 and id is 691 raw text is: Feedback Loop Failure: Implications for the Self-Regulation of the Sharing Economy Abbey Stemler* Ratings and reviews are the lifeblood of the Sharing Economy. They create a reputation proxy that makes us feel comfortable jumping into strangers' cars, sleeping in their beds, and having meals at their kitchen tables. However, new and existing evidence from the fields of psychology and behavioral economics shows us that these feedback loops might be flawed, which can impair the risk calculus for Sharing Economy users and potentially limit who has access to the benefits of Sharing Economy platforms. This Article examines how proposed theories for regulating the Sharing Economy depend on accurate feedback mechanisms, and argues that this belief should be questioned. Instead of relying on the wisdom of the crowd, we might be relying on the collective bias of the crowd to our detriment. Introduction ........................................ 674 I. A Brief Overview of the Sharing Economy ...... ..... 676 II. Magical Reputation Systems: The Regulatory Panacea?................................... 680 A. The Making of Reputation Systems ...... ....... 684 B. How Well Reputation Systems Work...... ......686 III. Problems with Reputation Systems ................ 687 A. Accurate Representation of Past Transactions ........ 688 1. Reporting Bias........... .................689 2. Fear of Retaliation .............. ....... 691 3. Reciprocity Bias............. ...........692 C 2017 Abbey Stemler * Assistant Professor of Business Law and Ethics, Indiana University Kelley School of Business. I am grateful for the feedback on this Article and for insights shared at the 2016 Annual Academy of Legal Studies in Business Conference and 2016 Southeastern Association of Law Schools Annual Conference.

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