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  • Klein, Tobias
  • Lambertz, Christian
  • Spagnolo, Giancarlo
  • Stahl, Konrad O.

Abstract

Feedback mechanisms that allow partners to rate each other after a transaction are considered crucial for the success of anonymous internet trading platforms. We document an asymmetry in the feedback behaviour on eBay, propose an explanation based on the micro structure of the feedback mechanism and the time when feedbacks are given, and support this explanation by findings from a large data set. Our analysis implies that the informational content of feedback records is likely to below. The reason for this is that agents appear to leave feedbacks strategically. Negative feedbacks are given late, in the "last minute", or not given at all, because of the fear of retaliative negative feedback. Conversely, positive feedbacks are given early in order to encourage reciprocation. Towards refining our insights into the observed pattern, we look separately at buyers and sellers, and relate the magnitude of the effects to the trading partners' experience.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5693.

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Date of creation: Jun 2006
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Handle: RePEc:cpr:ceprdp:5693

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Related research

Keywords: eBay; fear of retaliation; informational content; reciprocity; reputation mechanism; strategic feedback behaviour;

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References

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  1. Alvin E. Roth, 2002. "The Economist as Engineer: Game Theory, Experimentation, and Computation as Tools for Design Economics," Econometrica, Econometric Society, vol. 70(4), pages 1341-1378, July.
  2. Luís Cabral & Ali Hortacsu, 2004. "The Dynamics of Seller Reputation: Theory and Evidence from eBay," Working Papers 04-05, New York University, Leonard N. Stern School of Business, Department of Economics.
  3. Paul Resnick & Richard Zeckhauser & John Swanson & Kate Lockwood, 2006. "The value of reputation on eBay: A controlled experiment," Experimental Economics, Springer, vol. 9(2), pages 79-101, June.
  4. Daniel Houser & John Wooders, 2006. "Reputation in Auctions: Theory, and Evidence from eBay," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(2), pages 353-369, 06.
  5. Bajari, Patrick & Hortacsu, Ali, 2003. " The Winner's Curse, Reserve Prices, and Endogenous Entry: Empirical Insights from eBay Auctions," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 329-55, Summer.
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Citations

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Cited by:
  1. Li, Lingfang (Ivy) & Xiao, Erte, 2010. "Money Talks? An Experimental Study of Rebate in Reputation System Design," MPRA Paper 22401, University Library of Munich, Germany.
  2. Bargagliotti, Anna E. & Li, Lingfang (Ivy), 2009. "Decision Making Using Rating Systems: When Scale Meets Binary," MPRA Paper 16947, University Library of Munich, Germany.
  3. Klein, T.J. & Lambertz, C. & Stahl, K., 2013. "Adverse Selection and Moral Hazard in Anonymous Markets," Discussion Paper 2013-032, Tilburg University, Center for Economic Research.
  4. Li, Lingfang (Ivy), 2010. "What is the cost of venting? Evidence from eBay," Economics Letters, Elsevier, vol. 108(2), pages 215-218, August.
  5. David Masclet & Thierry Pénard, 2008. "Is the ebay feedback system really efficient ? an experimental study," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 200803, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
  6. Tobias J. Klein & Christian Lambertz & Konrad O. Stahl, 2013. "Market Transparency, Adverse Selection, and Moral Hazard," CESifo Working Paper Series 4552, CESifo Group Munich.
  7. Friederike Mengel & Axel Ockenfels & Werner Güth, 2006. "The Dynamics of Trust and Trustworthiness on EBay. An Evolutionary Analysis of Buyer Insurance and Seller Reputation," Papers on Strategic Interaction 2006-03, Max Planck Institute of Economics, Strategic Interaction Group.
  8. Werner Güth & Friederike Mengel & Axel Ockenfels, 2007. "An Evolutionary Analysis of Buyer Insurance and Seller Reputation in Online Markets," Theory and Decision, Springer, vol. 63(3), pages 265-282, November.

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