Neighborhood Cohesion and Generalized Exchange in the Sharing Economy

In the burgeoning sharing economy, trust is often cited as the main problem to be solved by sharing economy platforms. Consequently, sharing economy platforms have developed a multitude of mechanisms and tools aimed at promoting trust in the interactions that they facilitate, in particular reputation systems. The ubiquity of formalized reputation systems on sharing economy platforms begs the question whether such systems are a necessary condition for the emergence of trust, or whether trust is also possible without them. We study an exception to the rule: a Dutch sharing platform where users borrow items from other users in their local neighborhood. From a theoretical point of view, this platform constitutes a particularly clear case of a generalized exchange system. Interestingly, it does not feature a reputation system. In this paper, we study the relation between neighborhood cohesion and the success of sharing economy interactions on this platform.

Building on theories on generalized exchange, trust, and networks, we hypothesize that 1) the demand for interactions on the platform, in terms of memberships, is smaller in more cohesive neighborhoods, while 2) the supply in terms of the likelihood of a positive response to a request, is higher in more cohesive neighborhoods.

To test these hypotheses, we combine data on social cohesion in a random sample of 180 Dutch neighborhoods with data on over 1000 interactions on the platform in these neighborhoods. Our results provide insight into the viability of large-scale generalized exchange in the context of local embeddedness.