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Private Ordering on the Internet: The eBay Community of Traders

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Author Info
Baron, David P. (Stanford U)
Abstract

eBay provides an online auction venue for remote and anonymous individuals to realize gains from trade. As a venue it never sees the items sold, verifies the item listings, handles settlements, or represents either the buyer or seller. Despite the associated incentive problems over five million auctions are active on an average day. Trading is based on trust among members of its community, and trust is supported by a multilateral reputation mechanism based on user feedback. eBay supplements the reputation mechanism with rules and policies that mitigate incentive problems and support trust among users and trust between users and the company. Reputations and the rules and policies provide a private ordering of eBay's Internet community. This paper examines that private ordering in the context of market strategy and in the shadow of the public order.

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Paper provided by Stanford University, Graduate School of Business in its series Research Papers with number 1709.

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Date of creation: Dec 2001
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Handle: RePEc:ecl:stabus:1709

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  1. Kandori, Michihiro, 1992. "Social Norms and Community Enforcement," Review of Economic Studies, Blackwell Publishing, vol. 59(1), pages 63-80, January. [Downloadable!] (restricted)
  2. Greif, Avner, 1994. "On the Political Foundations of the Late Medieval Commercial Revolution: Genoa During the Twelfth and Thirteenth Centuries," The Journal of Economic History, Cambridge University Press, vol. 54(02), pages 271-287, June. [Downloadable!]
  3. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-48, June. [Downloadable!] (restricted)
  4. Greif, Avner, 1989. "Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders," The Journal of Economic History, Cambridge University Press, vol. 49(04), pages 857-882, December. [Downloadable!]
  5. Banner, Stuart, 1998. "The Origin of the New York Stock Exchange, 1791-1860," Journal of Legal Studies, University of Chicago Press, vol. 27(1), pages 113-40, January.
  6. Daniel Houser & John Wooders, 2006. "Reputation in Auctions: Theory, and Evidence from eBay," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 15(2), pages 353-369, 06. [Downloadable!] (restricted)
  7. Shyam NMI Sunder & Rong-Ruey Duh & Karim Jamal, 2002. "Control and Assurance in E-Commerce: Privacy, Integrity, and Security at eBay," Yale School of Management Working Papers ysm316, Yale School of Management. [Downloadable!]
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  8. Clay, Karen, 1997. "Trade without Law: Private-Order Institutions in Mexican California," Journal of Law, Economics and Organization, Oxford University Press, vol. 13(1), pages 202-31, April.
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