Trust and disintermediation: evidence from an online freelance marketplace

As an intermediary improves trust between two sides of its market to facilitate matching and transactions, it faces an increased risk of disintermediation: with sufficient trust, the two sides may circumvent the intermediary to avoid the intermediary’s fees. We investigate the relationship between increased trust and disintermediation by leveraging a randomized control trial on a major online freelance marketplace. Our results show that enhanced trust increases the chance for high-quality freelancers to be hired. When the trust level is sufficiently high, however, it also increases disintermediation, which offsets the revenue gains from the increase in the hiring of high-quality freelancers. We also identify heterogeneity across clients and freelancers in their tendencies to disintermediate.

Gu, Y. and Zhu, F. (2018), Trust and disintermediation: evidence from an online freelance marketplace, Harvard Business School.

Metadata

  • Research publication, Case study-platform
  • United States
  • Yes
  • professional services
  • Online client-determined specialist work
  • Upwork
  • rating, work organisation, client characteristics
  • English
  • Harvard Business School (Research institute)
  • Quantitative research
  • 2017
  • Open access
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