Year: 2016
Type: article
Abstract: Trust is an essential condition for exchange. Large societies must substitute the trust traditionally provided through kinship and sanctions in small groups to make exchange possible. The rise of internet-supported reputation systems has been celebrated for providing trust at a global scale, enabling the massive volumes of transactions between distant strangers that are characteristic of modern human societies. Here we problematize an overlooked side-effect of reputation systems: Equally trustworthy individuals may realize highly unequal exchange volumes. We report the results of a laboratory experiment that shows emergent differentiation between ex ante equivalent individuals when information on performance in past exchanges is shared. This arbitrary inequality results from cumulative advantage in the reputation-building process: Random initial distinctions grow as parties of good repute are chosen over those lacking a reputation. We conjecture that reputation systems produce artificial concentration in a wide range of markets and leave superior but untried exchange alternatives unexploited.
Source: Scientific Reports
DOI: 10.1038/srep38304
Authors: Vincenz Frey, Arnout van de Rijt
Institutions: Utrecht University, Stony Brook University
Language: English
Subfield: Safety Research
Field: Social Sciences
Domain: Social Sciences
SDG: Reduced inequalities
Open Access status: gold
Estimated APC paid: $2,690
Funder: National Science Foundation
OpenAlex ID: W2561742801