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The Effect of ID Verification in Online Markets: Evidence from a Field Experiment

Author

Listed:
  • Jeffrey A. Livingston

    (Bentley University)

  • Patrick A. Scholten

    (Bentley University)

Abstract

eBay’s ID Verify program, which allowed sellers to pay a fee to have their identity confirmed by a credit information company, was designed to alleviate asymmetric information problems in online auctions. We conduct a field experiment where items are sold on eBay by one of four identities that either are or are not ID verified and have either a good or no reputation. We find that ID verification increases the number of bids placed but has no impact on the level of the winning bid, and may even lower the winning bid among sellers who have good reputations.

Suggested Citation

  • Jeffrey A. Livingston & Patrick A. Scholten, 2019. "The Effect of ID Verification in Online Markets: Evidence from a Field Experiment," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 54(3), pages 595-615, May.
    • Handle: RePEc:kap:revind:v:54:y:2019:i:3:d:10.1007_s11151-018-9655-7
    DOI: 10.1007/s11151-018-9655-7
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    References listed on IDEAS

    as
    1. Jeffrey A. Livingston, 2010. "The Behavior Of Inexperienced Bidders In Internet Auctions," Economic Inquiry, Western Economic Association International, vol. 48(2), pages 237-253, April.
    2. Patrick Bajari & Ali Hortaçsu, 2004. "Economic Insights from Internet Auctions," Journal of Economic Literature, American Economic Association, vol. 42(2), pages 457-486, June.
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    4. Peters, Michael & Severinov, Sergei, 2006. "Internet auctions with many traders," Journal of Economic Theory, Elsevier, vol. 130(1), pages 220-245, September.
    5. Glenn W. Harrison & John A. List, 2004. "Field Experiments," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1009-1055, December.
    6. A. Colin Cameron & Douglas L. Miller, 2015. "A Practitioner’s Guide to Cluster-Robust Inference," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 317-372.
    7. Kevin Hasker & Robin Sickles, 2010. "eBay in the Economic Literature: Analysis of an Auction Marketplace," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 37(1), pages 3-42, August.
    8. Alvin E. Roth & Axel Ockenfels, 2002. "Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet," American Economic Review, American Economic Association, vol. 92(4), pages 1093-1103, September.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    eBay; Online auctions; Reputation; ID verification; Field experiments;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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