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Prior literature has reported a tendency for consumers to rate peer-to-peer (P2P) services more positively than the same services provided by traditional businesses (e.g. Airbnb vs. hotel). We first show that consumers experience greater empathy toward a P2P service provider (a person) than a traditional service provider (a business). We then show that P2P services enjoy higher evaluations because empathy for the provider leads consumers to tolerate minor negative elements in those settings as compared to traditional business settings. Further, we show that this effect is moderated by the perceived size of the business. The implications of this type of rating bias on traditional businesses and consumer welfare, and the limitations of this research, are discussed. © 2025 Elsevier Inc. All rights are reserved, including those for text and data mining, AI training, and similar technologies.