We investigate how market participants possessing varying degrees of anonymity reduce asymmetric information costs in an electronic auction market using a quantifiable measure of reputation. The data suggest that purchasers in this self-enforcing market use reputation to price information asymmetries associated with counterparty risks. The results provide direct empirical evidence of an economic incentive for investing in reputation. The continually observable feedback of participants indicates that high seller reputation signals preferred traits, including advertised service accuracy, product description accuracy, delivery efficiency, and posttransaction communication. Despite some imperfections, the reputation measure represents clear differences in expected performance between high-reputation and low-reputation counterparties. Copyright 2002, Oxford University Press.
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Article provided by Oxford University Press in its journal Economic Inquiry.
Volume (Year): 40 (2002) Issue (Month): 4 (October) Pages: 633-650 Download reference. The following formats are available: HTML,
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Oliver Gürtler & Christian Grund, 2006.
"The Effect of Reputation on Selling Prices in Auctions,"
Discussion Papers
114, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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