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Is the ebay feedback system really efficient ? an experimental study

Author

Listed:
  • David Masclet

    (CREM - CNRS - CIRANO)

  • Thierry Pénard

    (CREM – CNRS - University of Rennes 1)

Abstract

The eBay Feedback Forum is claimed to be a crucial component of the success of eBay. Many empirical studies have found that this feedback system exerts a deterrent effect on the opportunistic behavior the Internet's anonymity may incite buyers and sellers to adopt. The feedback system in place on eBay is however far from being perfect and may be especially vulnerable to strategic ratings (or nonratings) that might reduce the informational content of feedback profiles. This article aims to examine the efficiency of the eBay feedback system, through a set of experiments based on the trust game. Our experimental design consists of four different treatments. The baseline treatment corresponds to a finite repeated simultaneous trust game. The second treatment, called “eBay rating” is identical to the baseline treatment except that we added a second stage in which the players have the opportunity of rating their partner. In this treatment, each participant is given the choice to either evaluate immediately or wait, knowing that only one rating will be accepted. The third treatment, called "Sequential rating" is identical to the “eBay rating” treatment, except that the order in which players evaluate one another is randomly determined by the computer. Finally in the fourth treatment, called “Simultaneous rating”, both players are required to make their rating decisions simultaneously. Our experimental results indicate that the eBay feedback system could be improved by either constraining partners to leave ratings simultaneously or by predetermining the rating sequence.

Suggested Citation

  • David Masclet & Thierry Pénard, 2008. "Is the ebay feedback system really efficient ? an experimental study," Economics Working Paper Archive (University of Rennes & University of Caen) 200803, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    • Handle: RePEc:tut:cremwp:200803
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    References listed on IDEAS

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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.

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    More about this item

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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