Year: 2015
Type: report
Abstract: We argue that reputation mechanisms used by platform markets suffer from two problems.First, buyers may draw conclusions about the quality of the platform from single transactions, causing a reputational externality across sellers.Second, for a variety of reasons we discuss, reputations will be biased.We document these problems using eBay data and claim that platforms can benefit from identifying and promoting higher quality sellers.We create an unobservable measure of seller quality and demonstrate the benefits of our approach through a controlled experiment that prioritizes better quality sellers.We highlight the importance of reputational externalities and chart an agenda that aims to create more realistic models of platform markets.
DOI: 10.3386/w20830
Authors: Chris Nosko, Steven Tadelis
Institutions: University of Chicago, University of California, Berkeley
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1557570185