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Incentive Schemes in Customer Rating Systems - Comparing the Effects of Unconditional and Conditional Rebates on Intrinsic Motivation

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  • Dirk van Straaten

    (Paderborn University)

Abstract

The success of e-commerce is strongly affected by customer review systems, since they are the most important trust-building device in online shopping. However, participation in these systems is biased as certain customer groups do not provide insights from their experience with the purchased goods. This study aims to stimulate the participation in customer review systems by implementing financial incentives. By conducting an economic laboratory experiment, subjects are treated with different types of incentives, namely unconditional rebates (i.e., gifts) or conditional rebates (i.e., rebates in return) for providing customer reviews. Through this process, providing gifts triggers reciprocity and rebates in return rather address economic motives for providing reviews. Finding no evidence for peer reciprocity, we identify seller reciprocity, economic incentives, and altruism as the drivers for providing customer reviews. In particular, we find that conditional rebates strongly increase the quantity of customer ratings but crowd out ratings that are motivated by altruism. In comparison, unconditional rebates result in a lower increase of customer ratings but show the advantage of not crowding out intrinsically motivated customer ratings.

Suggested Citation

  • Dirk van Straaten, 2021. "Incentive Schemes in Customer Rating Systems - Comparing the Effects of Unconditional and Conditional Rebates on Intrinsic Motivation," Working Papers Dissertations 71, Paderborn University, Faculty of Business Administration and Economics.
    • Handle: RePEc:pdn:dispap:71
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    References listed on IDEAS

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    More about this item

    Keywords

    Customer Rating; Altruism; Reciprocity; Incentives; Crowding out;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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