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The Problem Of Reputation Reliability In Online Freelance Markets

Author

Listed:
  • Elina Ishmukhametova

    (National Research University Higher School of Economics)

  • Marina Sandomirskaia

    (National Research University Higher School of Economics)

Abstract

This paper explains how the problem of reputation credibility may arise in online freelance markets, as clients often complain about the quality of the completed work irrespective of the price and the rating of the worker. We develop a dynamic signaling model of falsified reputation purchase by low-skilled freelancers, focusing on a semi-separating equilibrium in every period. The main result states that when the costs of purchasing reputation are high, only the maximum rating is bought. This is due to low-skilled freelancers wanting to be chosen by clients in order to recoup their losses. When the costs are low, a variety of reputations are observed, but the reputation mechanism is not credible and adds little new information to prices

Suggested Citation

  • Elina Ishmukhametova & Marina Sandomirskaia, 2023. "The Problem Of Reputation Reliability In Online Freelance Markets," HSE Working papers WP BRP 260/EC/2023, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:260/ec/2023
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    References listed on IDEAS

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    More about this item

    Keywords

    reputation; freelance; marketplace.;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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