Interview with Ayelet Gordon-Tapiero

By: Ayelet Gordon-Tapiero

In a few words, can you tell us about yourself and how you found your way to the academic world?

After completing my LL.B. I worked as a legal advisor for an industrial company. The legal questions I faced were broad and diverse: a little tax law, professional standards, labor law, some real estate, corporate law, etc. I felt like I knew a little bit about many areas of law, and wanted to be in a position where I could learn a lot about one particular field. After the birth of my second son I was able to “recalculate my route” and decide that the destination I wanted to get to was the Law Faculty.

What is the main core of your research? Can you give an example or two?

I am currently writing my doctoral dissertation on the Regulation of the Sharing Economy, from a consumer protection point of view. The sharing economy has developed rapidly over the past decade and changed the face of markets it has entered. The term “sharing economy” describes an economic model based on sharing underutilized assets. Usually this term is used to describe platforms whose main focus is on facilitating peer-to-peer transactions (though as the market develops this is not always the case). The best-known sharing economy platforms are Airbnb and Uber. But the sharing economy encompasses many more platforms in a variety of areas: Taskrabbit, Kickstarter, Rent-a-Runway, Upwork, Gokid, Dog for a Day, and even an app called Airpnp are sharing economy platforms operating in a wide range of markets.

Traditionally, consumer protection laws apply to transactions between a business and a private individual. Therefore, these laws do not apply directly to transactions in the sharing economy that are concluded between peers. Bearing in mind that the relationships in such transactions are contractual, I examine whether regulators should become involved in various elements of these transactions, using what tools, and to what extent such intervention is in line with contractual theories.

Why choose this area over all others? Did your personal or professional background lead you to it?

I have always been interested in consumers and their protection. Consumer protection is heavily influenced by the understanding that human biases cause people to act in ways that are not always completely rational. The sharing economy is no exception. Actors in the sharing economy are heavily influenced by various biases. The reputation mechanism is an important component of sharing economy platforms, facilitating enough trust to allow strangers to transact with each other, and is heavily influenced by behavioral biases. As anyone who has completed a transaction on almost any online platform knows, platforms encourage users to leave ratings and reviews as a means of communicating their experience to potential future users. Users place considerable trust in this mechanism, though research has shown that this trust may not always be justified. In my research I identify the various biases that hinder the reliability of the reputation mechanism. A poor reputation mechanism, especially when users are unaware of its limits, could lead users to under-assess certain risks involved in their activity and become involved in risky transactions that they would otherwise have avoided. Becoming aware of these biases and understanding the way they operate can help overcome them and improve the reputation mechanism.

Do you think that in this cyber age these issues are even more complex compared to other times in history? If so – in what ways?

Sharing has existed for thousands of years. Before the internet, before cell phones, and before cars – human beings were sharing. It is the most universal form of economic behavior. The concept of sharing surplus is hundreds of years old. People lent each other objects and gave each other rides long before the development of the internet. The internet has enabled these types of activities on a much larger scale and has created mechanisms that encourage enough trust in individuals to allow them to transact with complete strangers. This is no simple feat. If somebody had told you twenty years ago that you would feel comfortable getting into a stranger’s car, or staying in the home of a person you don’t know, you probably would have told them they were crazy. The development of the internet, coupled with social developments, has enabled this new market.

One of the important social insights that have stood at the base of the development of the sharing economy is users’ preference for access over ownership. Owning a car is costly – you have to find parking for it wherever you go and take care of it, which is both time consuming and expensive. But do you really want to own a car? How much utility does one get out of the mere ownership of the car? Or is what you want actually to get from point a to point b as quickly and cheaply as possible?

Providers also enjoy the non-binding aspect of taking part in the sharing economy. Somebody who wants to sell handmade objects no longer has to go through the cumbersome, bureaucratic process of establishing a store, committing to a long-term lease, or completing a licensing process. All they have to do is open a profile on eBay and sell as many products as they choose to provide. This accessibility and lack of commitment is life changing.

How do you suggest to solve the problem you described?

While the positive aspects of the sharing economy are quite clear, there is also cause for concern in terms of consumer protection. Whereas in order to establish a hotel companies first had to undergo fire safety inspections, a kind grandmother renting out her home on Airbnb for two weekends every year has no such requirements to meet. In the traditional economy taxi drivers had to adhere to certain professional standards as well as submit their driving history and have their car undergo periodic checkups – not all ride sharing platforms impose such requirements. When somebody buys a toy in a store, they have a level of certainty that the toy adheres to minimal safety standards. These safeguards no longer exist as we once knew them on sharing economy platforms.

In examining how to regulate the sharing economy, I propose taking note of the complexity of its activity and impact. There is no “one-size-fits-all” solution to addressing the regulatory challenges arising from this economy. Each market must be analyzed and its dangers and potential negative impact addressed separately. I suggest several regulatory tools that can be utilized by regulators seeking to address this new field.

What is the next phase in your professional life?

I recently joined the Federman Center as a research fellow to take part in the Data Co-Op project. This project also recognizes the importance of community, and seeks to harness its power in order to advance the interests of the individuals that make up that community. Technology has made it possible to digitize every part of our existence. Companies make large profits by using private information they gather from their users. At the same time, individual users have little knowledge or control over what information is collected from them, what is done with it, and who makes a profit off of it. What is certain is that individuals reap no monetary benefit from the collection of their information and exercise no control over it. This is concerning both from a financial point of view and from a democratic one. Data co-ops would create a new layer between users and platforms, allowing users to join together in order to achieve a better position with regard to platforms they operate on. I am very much looking forward to working on this project.

What is your message to the public?

Building on the social insights that have encouraged the development of sharing as social phenomenon and sharing economy platforms as a new market, my message to the public is to acknowledge the importance and contribution that the community we act in has on us. As a PhD student I have found that my community of peers has a big influence both on the academic development of my dissertation and on the changing ways I feel about it. It does indeed take a village.