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  • February 2021
  • Article
  • Management Science

Trust and Disintermediation: Evidence from an Online Freelance Marketplace

By: Grace Gu and Feng Zhu
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Abstract

As an intermediary improves trust between the 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. In this paper, we investigate the relationship between increased trust and disintermediation by leveraging a randomized control trial in an online freelance marketplace. We find that enhanced trust increases the likelihood of high-quality freelancers being hired. However, when the trust level is sufficiently high, it also increases disintermediation, which offsets the revenue gains from the increase in hiring high-quality freelancers. We also identify heterogeneity across clients and freelancers in their tendencies to disintermediate. We discuss strategies that intermediaries can use to mitigate the tension between trust building and disintermediation.

Keywords

Disintermediation; Intermediaries; Online Marketplace; Platform Strategy; Trust; Marketplace Matching

Citation

Gu, Grace, and Feng Zhu. "Trust and Disintermediation: Evidence from an Online Freelance Marketplace." Management Science 67, no. 2 (February 2021): 794–807.
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About The Author

Feng Zhu

Technology and Operations Management
→More Publications

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More from the Authors
  • Huazhu: A Chinese Hotel Giant's Journey of Digital Transformation By: Feng Zhu, Yulin Fang, Bonnie Yining Cao and Duan Yang
  • Ant Group (B) By: Krishna G. Palepu, Feng Zhu and Susie L. Ma
  • EbonyLife Media (B) By: Andy Wu, Feng Zhu, Pippa Tubman Armerding and Wale Lawal
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