Direct Communication and Two-Sided Matching Quality on a Digital Platform: A Perspective of Choice Based on Consideration Set

Extant research has revealed that direct communication between buyers and sellers on digital platforms facilitates transaction completion. However, the understanding of how direct communication influences the matching quality of these two-sided transactions is still limited. This study uses a multimethod approach to provide a perspective on how direct communication contributes to matching quality. In an observational study in the context of a peer-to-peer platform for long-term real estate rental properties, the study shows that longer direct phone communication between the renter (i.e., buyers) and the host (i.e., sellers) enables the renter to choose a relatively more unique alternative within her consideration set (i.e., an alternative that is distant from the average attribute levels of the consideration set) for the transaction. Also, we find that the relationship between having direct phone communication and ex post transaction satisfaction is stronger when a relatively more unique alternative is chosen. The implication is that direct phone communication allows the renter to collect supplemental information that is not observable online. Consequently, the renter can better leverage the breadth of her search results (i.e., the consideration set) in making her choice decision. We complement the observational study with a field survey to verify this informational mechanism. Furthermore, we conduct two randomized experiments to verify the motivation for engaging in direct phone communication and for choosing unique alternatives within the consideration set. Taken together, these insights extend the existing understanding of the benefits of direct communication on digital platforms.

History: Eric Zheng, Senior Editor; Sunil Wattal, Associate Editor.

Funding: P. Song acknowledges support from the National Natural Science Foundation of China [Grant 71922012].

Supplemental Material: The online appendix is available at https://doi.org/10.1287/isre.2023.1235.