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Markets, trust and cultural biases: evidence from eBay

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  • Perez-Truglia, Ricardo

Abstract

A body of research argues that cultural biases in trust may be responsible for economic backwardness. This paper studies the role of cultural biases in a real-world market, eBay, with well-designed features intended to facilitate cooperation. We analyze the buyer’s decision to leave negative feedback as an act of mistrust towards the seller. To identify the effects of buyer characteristics on feedback choices, we exploit an identification strategy that leverages high-volume data from millions of transactions. We find that negative feedback decreases as buyers gain experience on the market. Also, we show that measures of pro-social beliefs and behavior do not explain feedback choices. Our favorite interpretation is that cultural biases in trust may have limited importance in markets with effective reputation-building mechanisms.

Suggested Citation

  • Perez-Truglia, Ricardo, 2018. "Markets, trust and cultural biases: evidence from eBay," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 72(C), pages 17-27.
    • Handle: RePEc:eee:soceco:v:72:y:2018:i:c:p:17-27
    DOI: 10.1016/j.socec.2017.11.004
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    Cited by:

    1. Daniel W. Elfenbein & Raymond Fisman & Brian McManus, 2019. "The Impact of Socioeconomic and Cultural Differences on Online Trade," NBER Working Papers 26197, National Bureau of Economic Research, Inc.
    2. Jiang Bing & Allen Samuel K., 2019. "To Be a Blood Donor or Not to Be? Investigating Institutional and Student Characteristics at a Military College," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(4), pages 1-17, October.

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    More about this item

    Keywords

    Market; Trust; Culture;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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