Turn on instant booking or not? Decisions of rival hosts

Peer-to-peer accommodation platforms, such as Airbnb, create value by matching hosts and guests. Instant booking services have changed the matching mode and greatly improved the matching efficiency on the accommodation platforms but at the expense of matching quality. This study develops a game-theoretical model to characterize two rival hosts' decisions on turning on instant booking or not and their pricing decisions. We uncover conditions under which the two rival hosts will use instant booking. All hosts turning on instant booking is not always the best market configuration for the platform when the natural matching probability (without instant booking) is relatively high. Management implications are provided to help peer-to-peer accommodation platforms guide hosts in making matching decisions and maximize their profits.