Reputation as Regulation in the Platform Economy

In the last years, online rating and reputational mechanisms have become increasingly important in the regulation of behavior in the platform economy. Consumers tend to rely on online reviews to distinguish between service providers. The European Commission, the Federal Trade Commission and a strand of legal scholarship have praised these mechanisms for generating valuable information, reducing market failures and consumer risks. However, this position has overlooked evidence suggesting that the additional data provided by online reputation does not address information asymmetries due to the multiple shortcomings of online reputational mechanisms. In this article, I discuss the regulatory potential of online reputation and offer a reflection on the assumption that the availability of more information reduces the need for public regulation.