Reputation in an Internet Auction Market
Year: 2002
Type: article
Abstract: We investigate how seller reputation affects bidding activity in an Internet auction market. We find that bidders reward higher reputation sellers with higher prices. Sellers have incentive to invest in reputation despite noise due to the ability of participants to shed reputations using cheap pseudonyms and disincentives to report negative outcomes. The market thrives in spite of unobservable products and relatively high contract enforcement costs. The specific feedback of participants suggests that high seller reputation signals preferred traits including delivery efficiency, product description accuracy, advertised service accuracy, and post-auction communication. Overall, the data provide empirical support suggesting that the reputation measure and accompanying feedback align the interests of buyers with economically motivated sellers.
Source: Economic Inquiry
DOI: 10.1093/ei/40.4.633
Authors: Cynthia G. McDonald, V. Carlos Slawson
Institutions: University of Missouri, Louisiana State University
Language: English
Field: Decision Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3124429632