The emergence of profit-based online platforms related to the Sharing
Economy, such as BlaBlaCar and Airbnb, provides new means for end users to create
an income from their possessions. With this opportunity, participants have to make
strategic economic decisions despite limited formal expertise and information. Decentralization
(using digital technologies) and reputation (using user reviews) are the core
mechanisms chosen by these platforms to mitigate these limitations and to work
efficiently as online matchmakers. We test the performance of these two mechanisms
by studying the allocative efficiency (in terms of value and volume of transactions) of
simulated marketplaces under different types of motivation from the participants and
control from the platforms. As a result, we find an inverted-U relationship between the
decision-making leeway available to the participants and the platform’s allocative
efficiency. From the participants’ perspectives, too much freedom or too many barriers
lead to market failures affecting specific participants: low-end consumers are banned
from the marketplace while high-end providers experience lower levels of activity. As
governance advice for these platforms, we show the limitations of promoting these
platforms on the sole motive of monetary rewards.

• Banned from the sharing economy: an agent-based model of a peer-to-peer marketplace for consumer goods and services