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Reputation and Feedback Systems in Online Platform Markets

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  • Steven Tadelis

    (Haas School of Business, University of California, Berkeley, California 94720
    The National Bureau of Economic Research, Cambridge, Massachusetts 02138
    Centre for Economic Policy Research, London EC1V 0DX, United Kingdom)

Abstract

Online marketplaces have become ubiquitous, as sites such as eBay, Taobao, Uber, and Airbnb are frequented by billions of users. The success of these marketplaces is attributed to not only the ease in which buyers can find sellers, but also the trust that these marketplaces help facilitate through reputation and feedback systems. I begin by briefly describing the basic ideas surrounding the role of reputation in facilitating trust and trade, and offer an overview of how feedback and reputation systems work in online marketplaces. I then describe the literature that explores the effects of reputation and feedback systems on online marketplaces and highlight some of the problems of bias in feedback and reputation systems as they appear today. I discuss ways to address these problems to improve the practical design of online marketplaces and suggest some directions for future research.

Suggested Citation

  • Steven Tadelis, 2016. "Reputation and Feedback Systems in Online Platform Markets," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 321-340, October.
    • Handle: RePEc:anr:reveco:v:8:y:2016:p:321-340
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    File URL: http://www.annualreviews.org/doi/10.1146/annurev-economics-080315-015325
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    More about this item

    Keywords

    reputation; trust; asymmetric information; online markets;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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