The Influence of Regulation on Trust and Risk Preference in Sharing Communities

Sharing within communities has gained popularity in recent years. However, taking part
in a community also comes with a certain amount of risk. This perceived amount
of risk can be contained by regulations within a community as well as by potential
participants’ trust in the community and the other members. We argue for a relation
between regulation and the willingness to take the risk of joining a sharing community
with trust as a mediator. Thereby, we distinguish between two kinds of regulation (soft
and harsh regulation) and two kinds of trust (implicit and reason-based trust) on two
different levels (vertical and horizontal trust). In one laboratory and one online experiment
with 432 participants overall, we found that the compound of high soft and low harsh
regulation increases participants’ willingness to take the risk of participation and that the
effect of soft regulation is mediated mainly by vertical and horizontal reason-based trust.
Based on our results, we encourage sharing communities to count on soft regulation in
order to increase potential members’ trust in the community and therefore take the risk
to participate.